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    Corporate Governance Failure at Satyam Quiz3

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    Deepak Matlani
    This document provides information about a corporate governance failure case at Satyam. It discusses Satyam's history as India's fourth largest IT company that offered services to many clients. The case involved a $1.4 billion fraud where financial books were falsified. Key learning objectives are to understand how corporate governance flaws can lead to scandals and the roles of promoters, directors, auditors and government in failures. Theories of agency theory and transaction cost theory are also summarized.

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    Corporate Governance Failure at Satyam Quiz3

    Uploaded by

    Deepak Matlani
    59 views2 pages
    This document provides information about a corporate governance failure case at Satyam. It discusses Satyam's history as India's fourth largest IT company that offered services to many clients. The case involved a $1.4 billion fraud where financial books were falsified. Key learning objectives are to understand how corporate governance flaws can lead to scandals and the roles of promoters, directors, auditors and government in failures. Theories of agency theory and transaction cost theory are also summarized.

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    This document provides information about a corporate governance failure case at Satyam. It discusses Satyam's history as India's fourth largest IT company that offered services to many clients. The case involved a $1.4 billion fraud where financial books were falsified. Key learning objectives are to understand how corporate governance flaws can lead to scandals and the roles of promoters, directors, auditors and government in failures. Theories of agency theory and transaction cost theory are also summarized.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    59 views2 pages

    Corporate Governance Failure at Satyam Quiz3

    Uploaded by

    Deepak Matlani
    This document provides information about a corporate governance failure case at Satyam. It discusses Satyam's history as India's fourth largest IT company that offered services to many clients. The case involved a $1.4 billion fraud where financial books were falsified. Key learning objectives are to understand how corporate governance flaws can lead to scandals and the roles of promoters, directors, auditors and government in failures. Theories of agency theory and transaction cost theory are also summarized.

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    Name: Deepak kumar

    I’D: 20201-27368
    Course code: M-12654

    Corporate Governance Failure at Satyam


    History:

    The case is about the collapse of both Satyam and its founder, Ramalinga Raju, who was a major
    celebrity in corporate India.

    The Satyam case is about a US$1.4 billion corporate governance fraud. Satyam is India's fourth-largest
    information technology company. It offered Information Technology (IT) services to around 690 clients,
    such as Nissan motors, general motors, etc.

    Learning objective:

    This case can help in the process of understanding how corporate governance works and how flaws, in
    this kind of governance, can lead to some scandal situations. It also helps understanding the role of a
    promoter, independent directors, auditors and the government in corporate governance failures. And
    most of all, this case can give a great lead to clarifying corporate governance theories.

    The Reasons behind inadequate corporate governance at Satyam:

    The unethical conduct was one of the main reasons behind the inadequate corporate governance at
    Satyam. There was no explicit or implicit code of ethics surrounding Satyam’s corporate culture; bribery,
    corruption, and exchange of favors, within and outside the company, appear to have occurred with
    frequency at various levels. All the financial books showed different and false status. All the taxes on
    account of the non-existent accrued interests, which were a considerable loss for the company that
    continuous, damage the company finance. The true role of audit committee is to ensure transparency in
    the company, that financial disclosures and financial statements provide a correct, sufficient and
    creditable picture and that, cases of frauds, irregularities, failure of internal control system within the
    organization, were minimized, which the committee failed to carry out in Satyam’s case.

    The learning objectives from the case for future prospects of corporate governance :

     The company should know that all inaccuracies must be investigated on time. if your accounts
    are not balancing, or if something seems inaccurate, the make the accurate on time.
     Everyone should have given the responsibilities to perform the task then check the performance
    level of work of each employee so that if any one of them is not work well then it should be
    easily find out the problems.
     Good corporate governance should be followed lesson concerns splitting up the roles, of
    the CEO and the Chairman of the Board, thus, helps avoid situations like the one at Satyam.

    The theories of corporate governance:

    1. Agency theory:
    It illustrates the relative between a primary person, who assigns task, and the mediator who
    executes that task. It concerns solving two kinds of problems that can come up in this
    relationship. In this theory, it is crystal clear to see the agent is playing the most part in
    determining the status of an organization.
    2. Transaction cost theory:
    When company wants to exploit a firm-specific asset abroad it will more likely invest in own
    facilities rather than others facilities,
    For example licensing if transaction costs are high. The more intangible the firm-specific asset
    is, the greater the incentive for internalization will be.
    Organizing transactions may be carried out into two methods, the price system or hierarchy. The
    problem with the price system may be that some market participants take advantage of
    measurement difficulties to overprice and/or underperform. To avoid this 'cheating' behavior
    companies internalize and integrate transactions.

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