governance failure at satyam

governance failure at satyam

Order Description

Description: Satyam Computers, winner of the Golden Peacock Award for excellence in corporate governance, ironically became a noted failure in the history of

governance in India when Ramalinga Raju, founder and chairman, admitted fraud in his resignation letter. An unrelated acquisition by Satyam Corporation created

discontent among shareholders and lead to a series of investigations. The investigations revealed a fraud of about INR 50 billion ($1.5 billion). This led to

resignations by several board members and the CEO. Ultimately, Tech Mahindra acquired the company. The entire episode became a mockery of corporate governance

practices, raising questions about the efficacy of well accepted norms.
This case covers the events that led to the failure of Satyam’s governance practices. The roles of various parties, such as the managers, board of directors, auditors

and bankers, are discussed in detail. The case draws attention to various corporate governance and ethical issues and also provides an opportunity to discuss the

measures that should be taken by regulators, auditors and other bodies to prevent such frauds.
Assignment: Students must address the following questions in an essay:
1. Discuss the circumstances under which Satyam’s fraud was exposed. What do you think were the reasons for the fraud? Could this fraud have been prevented? How?
2. Critically evaluate the corporate governance mechanisms adopted by Satyam. What characteristics of the board of directors may prevent financial statement fraud?

What lessons about the audit committee can be learned from this case? What other governance mechanisms should be adopted to ensure compliance?
Directions: Students should address the questions above in a typed document (double spaced; 12-point font; 5 pages maximum; essay format). The case report should

provide a title page, with the student’s name, section number, and date of submission. Your responses should be uploaded to D2L before the scheduled class on Monday,

December 8. Strong responses will reference the material covered in Chapter 10 of our textbook, as well as the additional readings suggested on the following page.
Guidelines: Please note the following:
• All case reports are to be written (double spaced) using 12 point type with a serif font for the body (Times New Roman) and sans serif font for headings (Calibri).

The report should follow correct form, spelling, grammar, etc. The body of the paper should be no more than five pages including specific recommendations supported by

your analyses. Number the pages.
• The report may include an assortment of charts, tables, and exhibits in an appendix to support your analyses and recommendations. Do not add exhibits that are

already included in the case. Each exhibit must be referenced and discussed in the body of the paper. The appendix does not count towards the main body limit of five

pages.
• The main body of your report should contain sufficient detail to explain and support the major issues identified in the case and the primary recommendations for

solving these problems. Do not just rehash case facts. Present an insightful and unique analysis.
• The reports will be judged according to standards of effective business communication. They should be clear and cogent. The criteria for grading case reports

include:
o Evidence of ability to size-up the organization’s situation and to identify key problems/issues.
o Use of appropriate analytical techniques, sound logic, and well-supported arguments in evaluating the organization’s present condition and future prospects.
o Evidence of ability to formulate realistic and workable recommendations for action. Quality contributions will reference the material in Chapter 10 of your textbook,

as well as the additional readings suggested below.
o Thoroughness — both (a) scope and coverage and (b) depth of analysis.
o Evidence of an ability to use good communication skills.

Suggested Readings and Material:
• Bronner, R. (2003). “Pathologies of Decision-Making: Causes, Forms, and Handling,” Management International Review, 43, pp. 85-101.
• Camillus, J.C. (2008). “Strategy as a Wicked Problem,” Harvard Business Review, May, pp. 98-106.
• Certo, S.T., Connelly, B.L., and Tihanyi, L. (2008). “Managers and Their Not-So Rational Decisions,” Business Horizons, 51, pp. 113-119.
• De Kluyver, Cornelis A. (2009). A primer on corporate governance. New York, NY : Business Expert Press. (2nd edition, 2013)
• De La Rama, M. (2012). “Corporate Governance and Corruption: Ethical Dilemmas of Asian Business Groups,” Journal of Business Ethics, 109: 501-519.
• Paine, Lynn, Rohit Deshpandé, Joshua D. Margolis, and Kim Eric Bettcher (2005). “Up to Code: Does Your Company’s Conduct Meet World-Class Standards?” Harvard

Business Review, December, pp. 122-133.
These materials may be sourced at the GSU library and online through PAWS. Students are also free to conduct their own search for relevant readings that may address

the questions posed.

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