07-01-2009

Satyam Compter, the importance of corporate governance

During the last weeks of December, Mumbay based Satyam Computer offered 1.5 Billion in cash for two service companies, more than it had at disposal.The deal was later reversed but various allegations emerged about its accounting practices. The chairman eventually admitted today to have falsified the accounts, that made the stock very attractive based on the principles of Joel Greenblat's magic formula. As a consequence, Merril Lynch cancelled its advisory contract with the group. The stock is now dead.

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