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Yinguangxia: An Epitome of Corporate Governance Flaws in China is a Harvard Business (HBR) Case Study on Finance & Accounting , Fern Fort University provides HBR case study assignment help for just $11. Our case solution is based on Case Study Method expertise & our global insights.
Yinguangxia ("YGX"), a joint stock listed company in China, has captured much media attention since the mid-1990s for its contribution to China's eco-agricultural industrialisation and modernisation of traditional Chinese medicine. The astonishing leap of its share prices, about 440% in 2000, caused journalists at Caijing, a local reputable financial magazine, to be suspicious and they set off to investigate YGX. On 2 August 2001, Caijin published an article alleging YGX's misrepresentation of export activities, which involved its Tianjin subsidiary's sale of biologically extracted products to a German company, Fidelity Trading GMBH. A profit overstatement of US$93 million from 1998 to 2001 was eventually revealed by China Securities Regulatory Commission, and four of the company's senior officials, including the former CEO and CFO of YGX and Tianjin Guangxia, were sent to jail for forging documents and fraudulent misrepresentation of information. The operating licence of the company's external auditors, Zhongtianqin, was revoked and the professional certificates of its two certified public accountants were repealed. The scandal also resulted in the investors' crusading pursuit of private indemnification against their investment loss; the legal protection of private shareholders in China remained an issue of great concern in the country. Having been a top performer on the Chinese stock market, YGX's fallout has revealed the deficiencies of the corporate governance system in China. It also brings to light the problems involved in auditing practices in China.
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Even before you start reading a business case study just make sure that you have brushed up the Harvard Business Review (HBR) fundamentals on the Finance & Accounting. Brushing up HBR fundamentals will provide a strong base for investigative reading. Often readers scan through the business case study without having a clear map in mind. This leads to unstructured learning process resulting in missed details and at worse wrong conclusions. Reading up the HBR fundamentals helps in sketching out business case study analysis and solution roadmap even before you start reading the case study. It also provides starting ideas as fundamentals often provide insight into some of the aspects that may not be covered in the business case study itself.
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My case study strategy involves -
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Another way of understanding the external environment of the firm in Yinguangxia: An Epitome of Corporate Governance Flaws in China is to do a PESTEL - Political, Economic, Social, Technological, Environmental & Legal analysis of the environment the firm operates in. You should make a list of factors that have significant impact on the organization and factors that drive growth in the industry. You can even identify the source of firm's competitive advantage based on PESTEL analysis and Organization's Core Competencies.
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