Chapter 7, Problem 27QP

Distinguish between kings 11 and kings 111 reports on corporate governance

QUESTION 2 Read the following scenario carefully and then answer the question below: Gorata Mbaiwa, the former Chief Executive Officer of Okavango (Ltd), has succeeded the retiring chairman of the company's board of directors. Shareholders have contended that this succession contravenes established best practices in corporate governance. Additionally, some individuals have expressed a lack of understanding regarding the concerns raised by shareholders. Required: Given the context of Gorata Mbaiwa's appointment as Chairman of Okavango (Ltd) after serving as CEO, analyse five potential violations of corporate governance principles that would reasonably lead to shareholder concern. (25 marks)

QUESTION 1 The Enron scandal serves as a critical case study in corporate governance and ethics. Answer the following questions based on your understanding of the Enron case: The Enrol Scandal The Enron scandal was an accounting scandal sparked by American energy company Enron Corporation filing for bankruptcy after news of widespread internal fraud became public in October 2001, which led to the dissolution of its accounting firm, Arthur Andersen, previously one of the five largest in the world. The largest bankruptcy reorganization in U.S. history at that time, Enron was cited as the biggest audit failure. Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. Several years later, when Jeffrey Skilling was hired, Lay developed a staff of executives that- by the use of accounting loopholes, the misuse of mark-to-market accounting, special purpose entities, and poor financial reporting - were able to hide billions of dollars in debt from failed deals…