Case Study - Satyam Fiasco
ETHICS &
GOVERNANCE
Case Study:
The Satyam Fiasco
July 7
2014
Submitted to: Prof. Dr. Syed Abdul Hamid AlJunaid
Submission Deadline: July 18th, 2014
This Project Paper is a Second partial fulfillment of Module IE-2002 of part II of
Chartered Islamic Finance Professional (CIFP) INCEIF – The Global University of
Islamic Finance - January 2014
Case Study: Satyam Fiasco
Describe India’s environment that investors should consider while investing in companies like Satyam?
Investors play an important role in detecting financial position of a company. They must ensure that the share value which is listed is genuine and as per its financial status and must ensure that the due diligence should be done properly to ensure that the company accounts and books are not manipulated. As far as Institutional investors are concerned, since they are representing the members of their institution, they must be very prudent and must counter check the integrity of the company through various reliable resources to ensure that the stakeholders interest shall be protected at all times and they should take more responsibility. Information about the company should be latest, from trusted source, easily accessible and correct.
Discuss the areas of company’s culture and structure that could have raised some red flags about the company’s situation?
Regarding the culture of the company, Satyam was influenced by the culture of Hinduism and there was no freedom of expression to the juniors. They just obey what their seniors asked them to do and in case someone says “No” to the senior was considered ethically and morally impolite and offensive act. Thus this culture would have been certainly ending up in the “follow the trail” approach and in a way, juniors were required to follow the steps of a Hindu Leader who said “Pretend as if you didn’t hear it, you didn’t see it, and you can’t speak”.
The key red flag areas of the company structure is the CEO and the
GOVERNANCE
Case Study:
The Satyam Fiasco
July 7
2014
Submitted to: Prof. Dr. Syed Abdul Hamid AlJunaid
Submission Deadline: July 18th, 2014
This Project Paper is a Second partial fulfillment of Module IE-2002 of part II of
Chartered Islamic Finance Professional (CIFP) INCEIF – The Global University of
Islamic Finance - January 2014
Case Study: Satyam Fiasco
Describe India’s environment that investors should consider while investing in companies like Satyam?
Investors play an important role in detecting financial position of a company. They must ensure that the share value which is listed is genuine and as per its financial status and must ensure that the due diligence should be done properly to ensure that the company accounts and books are not manipulated. As far as Institutional investors are concerned, since they are representing the members of their institution, they must be very prudent and must counter check the integrity of the company through various reliable resources to ensure that the stakeholders interest shall be protected at all times and they should take more responsibility. Information about the company should be latest, from trusted source, easily accessible and correct.
Discuss the areas of company’s culture and structure that could have raised some red flags about the company’s situation?
Regarding the culture of the company, Satyam was influenced by the culture of Hinduism and there was no freedom of expression to the juniors. They just obey what their seniors asked them to do and in case someone says “No” to the senior was considered ethically and morally impolite and offensive act. Thus this culture would have been certainly ending up in the “follow the trail” approach and in a way, juniors were required to follow the steps of a Hindu Leader who said “Pretend as if you didn’t hear it, you didn’t see it, and you can’t speak”.
The key red flag areas of the company structure is the CEO and the