Yinguangxia: An Epitome of Corporate Governance Flaws in China Case Solution

Yinguangxia (“YGX”), a joint venture of listed shares in China, captured media attention since the mid-1990s for their contribution to the eco-agricultural industrialization and modernization of traditional Chinese medicine China. Amazing break its share price, around 440% in 2000, has made journalists to Caijing, a local financial magazine trusted to take care and went to investigate YGX. On August 2, 2001 Caijin published an article based on export activities YGX misrepresentation article, which involved the sale of its subsidiary Tianjin biological products to a German company, Fidelity Trading GmbH. An exaggeration of the benefits of $ 93 million from 1998 to 2001 was finally revealed by the China Securities Regulatory Commission, and four senior officials of the company, including former CEO and CFO of YGX and Tianjin Guangxia were sent to prison for falsification and misrepresentation of information. The use of the external auditors of the Company, one Zhongtianqin license has been revoked, and certificates of professionalism of its two counters was repealed. The scandal also led the crusade against further loss of private investment investor compensation, legal protection of private shareholders in China remains a major concern in the country. Having been successful in the stock market of China, the consequences YGX revealed deficiencies in the system of corporate governance in China. It also highlights the problems of auditing practices in China.
by
Amy Lau
Claudia H. L. Woo
Source: University of Hong Kong
23 pages.
Release Date: November 5, 2007. Prod #: HKU687-PDF-ENG
Yinguangxia: an incarnation of defects in business management in solving the case of China

Yinguangxia: An Epitome of Corporate Governance Flaws in China Case Solution
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