Case study- Corporate Governance Failure at Satyam Computer Services Study

- Corporate Governance Failure at Satyam Computer Services - Case Study Example Ethics can be termed as a moral principles or set of standard followed by an individual. Business ethics can be termed as a set of moral values and principles that help the business managers to arrive at unified conclusion. The impact of business ethics on managerial decision making is huge and has the potentiality of changing the course of managerial decision making. It is observed that the influence of legal laws on the managerial decision making is huge and can have considerable amount of influence on the personal lives of individual as well (George, 2011). Since, business activity is also regarded as a human activity, the evaluation of business ethics would be done in a similar fashion. Apart from the importance of the business ethics, various facets of ethics and its application in the Satyam scandal would be covered. The application of ethical theories and how it’s effective result oriented approach would have changed the entire business scenario in Satyam. Ethical appli cations would have a serious impact on the future business activities, as varied dimensional aspects theory approaches proposed by Laznaick and Dimitriou (1995, cited by Dimitriou et. al., 2011) would have moulded the different business situations to large extent to increase the organizational outcome and effectiveness. 1.1 Satyam Case Scandal & its Ethical Implications The Satyam case scandal was one of the most classic cases of fraudulent accounting, which had a serious impact on its business activities, reputation and its earnings. The Satyam case scandal was a result of sheer negligence by the management towards it fiduciary duties, accounting procedure and lack of corporate social responsibility. One of the major reasons as observed by the analyst behind this kind of negligent behaviour would be due to the greed to earn more revenue just to satisfy the stakeholders and the shareholders. The major need that led to this kind of illegal behaviour was due to greed overshadowing, la ck of responsibility to meet the fiduciary duties and the fierce competition just to impress the stakeholders and investors. Apart from negligence to responsibility and duties towards the company ethical policies and procedures the company management planned to acquire 51 percent stake in Maytas infrastructure, which was one of the leading construction and infrastructure development companies (Caraballo, Cheerla and Jafari, 2010). In April 2008 the company CEO had acquired 37 stakes and the total turnover generated was almost $300 million with a net profit of $ 20 million (Caraballo, Cheerla and Jafari, 2010). In the same year the company had published its first IFRS audited financial statements and five members of the boards had approved the proposal to acquire a stake in the Maytas infrastructure and other properties (Caraballo, Cheerla and Jafari, 2010). However, without the shareholders approval, the company went ahead with the decision, which led to chaotic outcome. The decisio n regarding the acquisition