International Cases of Corporate Governance

Preface
Acknowledgments
Contents
Abbreviations
List of Figures
List of Tables
1 Introduction
References
2 Carillion PLC
John McDonough
Carillion’s Initial Problems
Acquisition and Debt
Excessive Outsourcing
Carillion’s Corporate Governance Issues
Executive Remuneration
Nonexecutive Directors (NEDs)
Carillion’s Auditors
External Auditor
Internal Auditor
The Cost of Carillion’s Collapse
Lessons Learnt from Carillion
Discussion Questions
References
3 Tesco Plc
A Brief History of Tesco
Retailer Competition
Tesco’s Corporate Governance Problems
Overstated Profits—The Whistle-blower
External Auditor
Tesco’s Audit Committee
Tesco’s Board of Directors
Lessons Learnt from Tesco
Discussion Questions
References
4 Volkswagen
Background
Winterkorn and Volkswagen’s ‘Strategy 2018’
Emission Testing
‘Green Clean Diesel’ Engine
The Explosion of Volkswagen’s Emission Scandal
Volkswagen’s Initial Response
Early Warnings
The Impact on Volkswagen Emission Scandal
Volkswagen’s Corporate Government Issues
Nonfeasance of the Management Board
Failure of the Supervisory Board in Its Oversight Role
Whistle-Blower System
Regulators
Lessons Learnt from Volkswagen’s Scandal
Discussion Questions
References
5 Wirecard
Wirecard’s Rise and Fall
Wirecard’s Corporate Governance Failure
Financial Fraud
Internal Controls
External Auditors
Negligence of Financial Regulators
Lessons Learnt from Wirecard’s Corporate Governance Failure
Discussion Questions
References
6 Stora Enso
Stora Enso’s History and Early CSR Practices
Mistreatment of Local Landowners in China
Child Labour in Joint Venture in Pakistan
Improvement of CSR Practices After the Ethical Crisis
Lessons Learnt from Stora Enso’s Corporate Governance Issues
Discussion Questions
References
7 Wells Fargo
The Scandal
Carrie Tolstedt and Community Bank
Customer Complaints
OCC Investigation
Initial Response of Wells Fargo
The Damage of the Scandal
Wells Fargo’s Corporate Governance Failure
Board of Directors and Its Role Monitoring Operations
The Decentralised Structure of Risk Control
Internal Whistleblowing System
The External Auditor
Regulators
Lessons Learnt from Wells Fargo’s Corporate Governance Failure
Discussion Questions
References
8  CommInsure
The Scandal
CommInsure’s Corporate Governance Issue
Lack of Oversight of Claims Assessors
Ineffective Whistle-blower Protection
Director Remuneration Linked to Profits
Auditor Failure
Regulatory Negligence in the Insurance Industry in Australia
Lessons Learnt from CommInsure
Discussion Questions
References
9 Toshiba (Japan)
The Scandal
Toshiba’s Corporate Governance Issues
Inappropriate Accounting Practices
Percentage of Completion Method
Deferred Recording of Expenses
Increased Inventory Valuation
Parts Transactions
Ineffective Monitoring of the Board of Directors and Outside Directors
Ineffective Monitoring of the Audit Committee
Failure of the External Auditor
Lifetime Employment and Unreasonable Executive Compensation
Lessons Learnt from Toshiba’s Corporate Governance Failure
Discussion Questions
References
10 Gome
GOME Proxy Contest
Damage Caused by the Proxy Contest
Damage to GOME’s Operations
Damage to the Interests of Shareholders
Damage to the Relationship Between the Shareholders and the Board of Directors
Lessons Learnt from GOME’s Proxy Contest
The ‘Overpowered’ Board of Directors
Lack of Accountability of Independent Directors
Nonneutral Institutional Investor
Discussion Questions
References
11 Alibaba
Alibaba’s Expansion Strategy and Business Model
1999–2002: Start-Up Stage
2003–2004: Development Stage
2005–2009: Expansion Stage
2010–2014: Accelerated Development
2014–Present
Alibaba’s Ownership and Control
1999–2004: Start-Up, Venture Capital/Private Equity (VC/PE) Entry
2005–2009: Yahoo Entry
2010–Present: Partnership System
Discussion on the Impact of Alibaba’s Partnership System
Separation of Ownership and Control
Partners’ Recognition of a Shared Culture and Values
Discussion Questions
References
12 Lee Kum Kee
History of LKK
Origins and Early Growth
Global Expansion: 1970s and 1980s
Expansion and Diversification Under the Fourth Generation: The 1990s
LKK’s Governance Challenges
Potential Infighting
Increasing Complexity of Multiple Generations
LKK’s Governance Transformation
Governance Code: Family Constitution
Governance Structure
LKK’s Performance Reward and Succession
Business Performance
Succession: Key Decisions Already Taken
LKK’s Family Governance vs. Business Governance
Discussion Questions
References
13 Yunnan Baiyao
History of the Company
The Rise of ‘Qu Huanzhang Panacea’ (1902–1949)
Yunnan Baiyao Under the Command Economy (1949–1978)
Listing on the Shenzhen Stock Exchange (1993)
Mixed Ownership Reform (2016–2019)
First-Stage Mixed Ownership Reform
Second-Stage Mixed Ownership Reform
Stock Market Reaction and Performance After the Reform
Performance Improvement Driver: Corporate Governance
Ownership Structure
Board of Directors and Supervisory Board with More Private Representatives
Professional Management System
Performance-Based and Equity-Based Compensation System
Yunnan Baiyao’s Corporate Governance Evolution
Discussion Questions
References
14 Conclusion
Common Causes of Corporate Governance Failure
Excessive Power of the Chair of the Board and CEO
Board of Directors
Internal Controls
Unethical Behaviour
Three Special Cases of Ownership and Control
Concluding Remarks
Index