1.3 Organisational failures Flashcards
What did the Financial Services Authority find as the cause of RBS Bank’s failure in 2011?
Te bank was meeting all technical standards but the board was making multiple poor decisions, suggesting deficiencies in managemenet, governance and culture.
How does Enron (2001 scandal) exemplify poor boardroom dynamics?
The incumbent and former CEO among others, held back large debts from their balance sheet, driving share price. Thousands of employees and investors lost their retirement accounts.
What were the facts of the 2002 WorldCom telecommunications scandal?
The CEO inflated revenues with fake accounting entries, leading to $80bn losses for investors and 30,000 lost jobs and the company filing for bankruptcy.
What were the factors of the 2002 Tyco scandal?
Tyco was a blue-chip security comany. Its CEO and CFO stole $150M from unapproved loans, disguised as executive bonuses.
How did US lawmakers react to the Enron, WorldCom and Tyco scandals?
The US introduced the Sarbanes-Oxley Act, including the requirement for top management to individually certify the accuracy of fnancial information, greater penalties for fraudulent activity, increased auditor independence.
What were the factors of the 2015 Volkswagen scandal?
VW had previously been praised for its governance structure, but poor culture led to falsification of diesel emissions results, leading to the ex-CEO being indicted for fraud. The board apparently only found out about the scandal shortly before headlines broke, showing a lack of udnerstanding of their accountability and a cultural failure.
Corporate failures suggest not that governance rules are wrong or unhelpful. Instead, the contention is that they are often diuted or t_________ by human b__________.
thwarted
behaviour
