Abstract
Corporate accounting fraud is not a new thing in this world after the debacle of Enron, which proved to be a stimulus for others to fancy their own Enron in their respective organizations. This started a series of events related to corporate financial crimes. With increasing trend in financial crimes across the globe, investors lost their confidence, the credibility of financial disclosures were being questioned and companies were facing huge financial losses. Satyam Computers Ltd was just another case featuring almost same causes like that of Enron and others including WorldCom. Satyam computers were once the crown jewel of Indian IT industry, but were brought to the ground by its founders in 2009 as a result of financial crime. The debacle of Satyam raised a debate about the role of CEO in driving an organization to the heights of success and its relation with the board members and core committees. The scam at Satyam brought to the light the role of corporate governance in shaping the protocols related to the working of audit committee and duties of board members. Thus, an in depth study is conducted to analyze the financial scam from a management's perspective.
Highlights
From the past several decades, the fraudulent activities within organizations were at their peak until serious efforts were taken after the emergence of fraud in the Enron case
The collapse of Enron was not the only one of its kind, but there emerged another anomaly which created a state of havoc in the Asian region and became famous enough to be called as The Enron of Asia and it was Satyam Computer Services, a Hyderabad India based company
Let us first discuss some positive points that the company had, which helped in making to the top and gaining trust of the investors: Satyam computer services Ltd started with only 20 employees and in just a matter of time it started to make it up to the top and began to be called the rising star of India
Summary
From the past several decades, the fraudulent activities within organizations were at their peak until serious efforts were taken after the emergence of fraud in the Enron case. Humans being REMM (Resourceful, evaluative and money maximizing) according to Jensen & Meckling 1976 would naturally tend to pursue their very own economic and social goals This dominant self-concern of managers/controllers would deviate them from their fiduciary responsibilities as (fair) agents. Traditionally speaking are most concerned with the return on their investment They do not have operational information and are not in a position to make fair evaluation of corporation’s success and future prospects. This paper unfolds Satyam Computer Services Ltd. Corporate Scandal of inflated financial health, the aroused concerns of investors about the effectiveness of Corporate Governance framework in India, the long term effects over Indian stock market resulting from Satyam’s scam and several suggestions from the Corporate Governance theory and practice that could have helped in preventing this debacle
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