Forge Group Ltd case study (B): director duties, management compensation and ownership, risk, and ethics

Article

Maloney, Suzanne. 2015. "Forge Group Ltd case study (B): director duties, management compensation and ownership, risk, and ethics." IMA Educational Case Journal. 8 (1).
Article Title

Forge Group Ltd case study (B): director duties, management compensation and ownership, risk, and ethics

ERA Journal ID41678
Article CategoryArticle
Authors
AuthorMaloney, Suzanne
Journal TitleIMA Educational Case Journal
Journal Citation8 (1)
Number of Pages9
Year2015
Place of PublicationUnited States
ISSN1940-204X
Web Address (URL)http://www.imanet.org/resources-publications/ima-educational-case-journal-(iecj)/issues/Volume%208,%20issue%201
Abstract

The demise of Forge Group Ltd (FGL) is used to examine corporate governance, management compensation and ownership, risk, and ethics. Forge Group Ltd was a successful engineering company that collapsed within 12 months of a share price peak. The importance of good fundamental internal reporting is demonstrated by giving students the benefit of hindsight. The visceral feel of a corporate collapse with real investors losing money highlights the relevance and value of accounting and basic financial management.

This case and companion case A analyze FGL’s collapse. Case A focuses on the “numbers” by examining the financial statements, working capital management, and growth. Case B focuses on directors’ duties, management compensation and ownership, risk, and ethics. Independently or together, the cases can form the basis for a discussion about the governance of corporations, including reporting, transparency, risk, compensation, and ethics.

Basic-level students would be expected to explain and discuss key corporate governance concepts such as director duties, management compensation and ownership, risk, and ethics. Intermediate-level students would be expected to apply concepts such as director duties, management compensation and ownership, risk, and ethics to a real-world scenario. And advanced-level students would be expected to critique and draw conclusions on the application of director duties, management compensation and ownership, risk, and ethics to a real-world scenario.

Keywordsfinancial statement analysis; take-overs; risk; corporate governance; ethics; management compensation
ANZSRC Field of Research 2020350105. Management accounting
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Byline AffiliationsSchool of Commerce
Institution of OriginUniversity of Southern Queensland
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