Corporate failure and ethical resources: a case study of Steinhoff and Carillion
- Authors: Mthombeni, Seyijeni Koos
- Date: 2023-10-13
- Subjects: Corporate governance , Business ethics , Steinhoff International (Firm) Corrupt practices , Carillion (Firm) Corrupt practices , Business failures , Accounting fraud
- Language: English
- Type: Academic theses , Master's theses , text
- Identifier: http://hdl.handle.net/10962/419165 , vital:71621
- Description: This study aimed to investigate the impact of disregarding ethical resources on company performance, with a particular focus on Carillion and Steinhoff as case studies. A pragmatist research philosophy was employed using a mixed methods approach, utilizing deductive inferencing to produce archival research. Data was collected from annual financial statements and existing literature on Steinhoff and Carillion's corporate failures. Both content analysis and statistical analysis were employed to analyse the data. The study found that both Carillion and Steinhoff were at the top of their respective industries when they began to underperform due to poor governance. On the part of Carillion, much of its failure can be attributed to aggressive bidding, while for Steinhoff, its failure was due to unscrupulous accounting practices. Corruption and fraud at the top echelon of each of these respective companies began to trickle down to the bottom of the hierarchy. Additionally, Steinhoff used a two-tier board system that promotes information asymmetry between a management board and a supervisory board. This gave Steinhoff’s management board leverage to manipulate company reports and hide information from the supervisory board. Steinhoff equally violated the board’s independence by making former management executives part of the supervisory board, who could potentially be lenient to the management board due to past relationships. This was further exacerbated by the CEO duality, which contributed to Steinhoff’s lack of board independence. Furthermore, Steinhoff’s board was reported to have served as board members for a long time, eventually leading them to create a group culture that negatively affected its board’s independence. Different from Steinhoff, which lacked board independence and board diversity, at face value, Carillion appeared to have a predominantly independent board with diverse experience and external commitments. However, Carillion also lacked board independence in a different way, as some of its board members were previously employed by KPMG. KPMG was also the external auditor of Carillion. This created a scenario where Carillion and KPMG were conniving, which may have affected the objectivity of the external audits on financial performance. Further to this, the CEO held outsized power over the board, which could have also resulted in a lack of independence. This, in turn, facilitated corrupt behaviour within the organisation, which may have contributed to its corporate failure. iv The findings of the study highlight the following three conclusions: i) profits that are premised on reckless, irregular, and fraudulent business and accounting practices are not sustainable; ii) governance structures that do not adhere to sound corporate governance principles result in impaired board independence and negatively affect firm performance; and iii) companies that reach the pinnacle of their success through unethical conduct are ultimately short-lived. , Thesis (MBA) -- Faculty of Commerce, Rhodes Business School, 2023
- Full Text:
- Date Issued: 2023-10-13
- Authors: Mthombeni, Seyijeni Koos
- Date: 2023-10-13
- Subjects: Corporate governance , Business ethics , Steinhoff International (Firm) Corrupt practices , Carillion (Firm) Corrupt practices , Business failures , Accounting fraud
- Language: English
- Type: Academic theses , Master's theses , text
- Identifier: http://hdl.handle.net/10962/419165 , vital:71621
- Description: This study aimed to investigate the impact of disregarding ethical resources on company performance, with a particular focus on Carillion and Steinhoff as case studies. A pragmatist research philosophy was employed using a mixed methods approach, utilizing deductive inferencing to produce archival research. Data was collected from annual financial statements and existing literature on Steinhoff and Carillion's corporate failures. Both content analysis and statistical analysis were employed to analyse the data. The study found that both Carillion and Steinhoff were at the top of their respective industries when they began to underperform due to poor governance. On the part of Carillion, much of its failure can be attributed to aggressive bidding, while for Steinhoff, its failure was due to unscrupulous accounting practices. Corruption and fraud at the top echelon of each of these respective companies began to trickle down to the bottom of the hierarchy. Additionally, Steinhoff used a two-tier board system that promotes information asymmetry between a management board and a supervisory board. This gave Steinhoff’s management board leverage to manipulate company reports and hide information from the supervisory board. Steinhoff equally violated the board’s independence by making former management executives part of the supervisory board, who could potentially be lenient to the management board due to past relationships. This was further exacerbated by the CEO duality, which contributed to Steinhoff’s lack of board independence. Furthermore, Steinhoff’s board was reported to have served as board members for a long time, eventually leading them to create a group culture that negatively affected its board’s independence. Different from Steinhoff, which lacked board independence and board diversity, at face value, Carillion appeared to have a predominantly independent board with diverse experience and external commitments. However, Carillion also lacked board independence in a different way, as some of its board members were previously employed by KPMG. KPMG was also the external auditor of Carillion. This created a scenario where Carillion and KPMG were conniving, which may have affected the objectivity of the external audits on financial performance. Further to this, the CEO held outsized power over the board, which could have also resulted in a lack of independence. This, in turn, facilitated corrupt behaviour within the organisation, which may have contributed to its corporate failure. iv The findings of the study highlight the following three conclusions: i) profits that are premised on reckless, irregular, and fraudulent business and accounting practices are not sustainable; ii) governance structures that do not adhere to sound corporate governance principles result in impaired board independence and negatively affect firm performance; and iii) companies that reach the pinnacle of their success through unethical conduct are ultimately short-lived. , Thesis (MBA) -- Faculty of Commerce, Rhodes Business School, 2023
- Full Text:
- Date Issued: 2023-10-13
Analysis of corporate failures: a case study of two South African banks
- Mqomboti, Xitshembiso Pronacia
- Authors: Mqomboti, Xitshembiso Pronacia
- Date: 2023-02
- Subjects: Business failures South Africa , Corporate governance South Africa , Risk management , Operational risk , Business ethics , Bank management South Africa , Banks and banking South Africa
- Language: English
- Type: Academic theses , Master's theses , text
- Identifier: http://hdl.handle.net/10962/419151 , vital:71620
- Description: This study analysed the factors that contributed to the failure of Venda Building Society Mutual Bank (VBS) and African Bank Limited and the impact it had on their key stakeholders. The specific objectives of this study were to evaluate African Bank and VBS bank's operational risk management processes and controls, the role of ethical failures at VBS bank and African Bank; and assess how the failures affected their stakeholders. The population sample of the study included African Bank and VBS. The study adopted a qualitative research method. Existing reports from both African Bank and VBS were used to collect data. The study adopted a thematic data analysis method, which includes data coding and the development of themes. The data analysis framework was derived from a defined set of research propositions and seven (7) themes were derived from this analysis method. The failure in operational controls of both banks and ineffective risk management structures including unethical conduct by the executive management and board of VBS bank, irregular financial transactions and weakened external auditing function resulted in an unaccountable executive relationship and reckless lending decision-making. This research study will expand on the existing body of knowledge on the failures and near-failures of banks in the South African banking sector. The South African banking industry and its regulatory bodies will be better equipped to strengthen their corporate governance in risk controls to mitigate future collapses and near collapses of banks. , Thesis (MBA) -- Faculty of Commerce, Rhodes Business School, 2023
- Full Text:
- Date Issued: 2023-02
- Authors: Mqomboti, Xitshembiso Pronacia
- Date: 2023-02
- Subjects: Business failures South Africa , Corporate governance South Africa , Risk management , Operational risk , Business ethics , Bank management South Africa , Banks and banking South Africa
- Language: English
- Type: Academic theses , Master's theses , text
- Identifier: http://hdl.handle.net/10962/419151 , vital:71620
- Description: This study analysed the factors that contributed to the failure of Venda Building Society Mutual Bank (VBS) and African Bank Limited and the impact it had on their key stakeholders. The specific objectives of this study were to evaluate African Bank and VBS bank's operational risk management processes and controls, the role of ethical failures at VBS bank and African Bank; and assess how the failures affected their stakeholders. The population sample of the study included African Bank and VBS. The study adopted a qualitative research method. Existing reports from both African Bank and VBS were used to collect data. The study adopted a thematic data analysis method, which includes data coding and the development of themes. The data analysis framework was derived from a defined set of research propositions and seven (7) themes were derived from this analysis method. The failure in operational controls of both banks and ineffective risk management structures including unethical conduct by the executive management and board of VBS bank, irregular financial transactions and weakened external auditing function resulted in an unaccountable executive relationship and reckless lending decision-making. This research study will expand on the existing body of knowledge on the failures and near-failures of banks in the South African banking sector. The South African banking industry and its regulatory bodies will be better equipped to strengthen their corporate governance in risk controls to mitigate future collapses and near collapses of banks. , Thesis (MBA) -- Faculty of Commerce, Rhodes Business School, 2023
- Full Text:
- Date Issued: 2023-02
Institutional self-deception
- Jacot-Guillarmod, Genevieve Nicole
- Authors: Jacot-Guillarmod, Genevieve Nicole
- Date: 2022-04-07
- Subjects: Self-deception , Business ethics , Social responsibility of business , Responsibility , Collective behavior Moral and ethical aspects , Attribution (Social psychology)
- Language: English
- Type: Academic theses , Doctoral theses , text
- Identifier: http://hdl.handle.net/10962/294548 , vital:57231 , DOI https://doi.org/10.21504/10962/294548
- Description: There are many examples of institutions which have made false claims, or performed certain acts, that have had, to varying degrees, a negative impact on their societies. For example, many corporations go to great lengths to present themselves as being environmentally friendly when in fact they are not. Many corporations have also been forced to recall dangerous products which they at one time or another insisted were safe. Research teams have misled participants with regard to what they can expect from their participation in studies, with grave consequences. Governments throughout the world are mired in corruption, and yet deny that this is so. One possible explanation is that in such situations these institutions are simply lying. However, another possible explanation is that these institutions are self-deceived, or lying to themselves. Recently it has been suggested that self-deception is something that affects certain groups as well as individuals. Given that institutions can wield a great deal of political, social and economic power, if institutions are capable of self-deception there is room for things to go awry on a very large scale with potentially dire consequences. Yet the explanations currently on offer for group-level self-deception appear to amount to instances of individual self-deception (either to certain key individual members of those groups being self-deceived, or to all or most members of a group sharing the same self-deceptive belief), and as such I do not regard the explanations currently on offer as satisfactory. I propose that there are certain situations in which we ought to see institutions themselves as self-deceived or lying to themselves. While the terms ‘self-deception’ and ‘lying to oneself’ are often used interchangeably, I differentiate between the two and argue that both institutional self-deception and an institution lying to itself are institution-level phenomena, and do not rely on any individual within the institution being self-deceived or lying to themselves. That this is so is of relevance to our attributions of accountability, and makes changes to institutional structure and procedures the focus of concern when it comes to preventing an institution succumbing to self-deception or lying to itself. , Thesis (PhD) -- Faculty of Humanities, Philosophy, 2022
- Full Text:
- Date Issued: 2022-04-07
- Authors: Jacot-Guillarmod, Genevieve Nicole
- Date: 2022-04-07
- Subjects: Self-deception , Business ethics , Social responsibility of business , Responsibility , Collective behavior Moral and ethical aspects , Attribution (Social psychology)
- Language: English
- Type: Academic theses , Doctoral theses , text
- Identifier: http://hdl.handle.net/10962/294548 , vital:57231 , DOI https://doi.org/10.21504/10962/294548
- Description: There are many examples of institutions which have made false claims, or performed certain acts, that have had, to varying degrees, a negative impact on their societies. For example, many corporations go to great lengths to present themselves as being environmentally friendly when in fact they are not. Many corporations have also been forced to recall dangerous products which they at one time or another insisted were safe. Research teams have misled participants with regard to what they can expect from their participation in studies, with grave consequences. Governments throughout the world are mired in corruption, and yet deny that this is so. One possible explanation is that in such situations these institutions are simply lying. However, another possible explanation is that these institutions are self-deceived, or lying to themselves. Recently it has been suggested that self-deception is something that affects certain groups as well as individuals. Given that institutions can wield a great deal of political, social and economic power, if institutions are capable of self-deception there is room for things to go awry on a very large scale with potentially dire consequences. Yet the explanations currently on offer for group-level self-deception appear to amount to instances of individual self-deception (either to certain key individual members of those groups being self-deceived, or to all or most members of a group sharing the same self-deceptive belief), and as such I do not regard the explanations currently on offer as satisfactory. I propose that there are certain situations in which we ought to see institutions themselves as self-deceived or lying to themselves. While the terms ‘self-deception’ and ‘lying to oneself’ are often used interchangeably, I differentiate between the two and argue that both institutional self-deception and an institution lying to itself are institution-level phenomena, and do not rely on any individual within the institution being self-deceived or lying to themselves. That this is so is of relevance to our attributions of accountability, and makes changes to institutional structure and procedures the focus of concern when it comes to preventing an institution succumbing to self-deception or lying to itself. , Thesis (PhD) -- Faculty of Humanities, Philosophy, 2022
- Full Text:
- Date Issued: 2022-04-07
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