”organisation’s response” topic 17 corporate governance

You don’t state which organisation you chose but if a limited company or listed company, then companies don’t normally just collapse and are liquidated. Beforehand there will be the weak governance issues that preceded this and the Board either reacting or not to these – so you need to look at what the Board response was to the worsening position/crisis. For example with Carillion, the Board until the last 12 months continued in its same-old, same-old way and tried to fool the market by upping the dividend slightly and dismissing any institutional shareholder fears and glossed over the weakening position. But by analysing the position going back years there were warning signs that were ignored – the ever mounting debt and decreasing cash, and any recovery plan that was proposed, was far too little too late.

The things above are the sorts of things you need to bring in. In Carillion’s final annual report there is a ‘happy smiley’ chairman who had always painted a very upbeat position of the company not just dismissing the institutional shareholder concerns but endorsing a couple of pages in the report dedicated to ‘why invest in Carillion’. Throughout the report there is excessive use of the words ‘robust’, ‘strong’ and ‘rigorous’ in terms of what they said they were doing [whereas the truth was more like mediocre, inadequate and dereliction of their duties] – all part of the gloss and ‘papering over the cracks’ stance that the Board collectively took. And the former CFO who had presided over this mess [so could hardly have been oblivious to the reality of the situation] took early retirement, and managed to sell off all of his Carillion shares before the share price really nose-dived making a tidy profit and left his successors to pick up the mess.