With the latest news about the founder of Evergrande being sentenced to life imprisonment in China, I thought there may be interest in understanding the series of events that led to its collapse and the regulatory actions taken against various parties.
I am therefore posting a case study on the company that was in volume 2 of the 2024 series of the Corporate Governance and Ethics case studies published by the Centre for Investor Protection (CIP) at NUS Business School. The case was written based on events until 31 May 2024.
Even though this is a case study on a Chinese company listed in Hong Kong, there is much that can be learnt by stakeholders in other markets. There are many business, accounting, financial management, audit, corporate governance and other lessons that can be discussed. One of the nuggets for this company is that in a study of share buybacks for all companies listed in Singapore, Malaysia and Hong Kong over a 12-year period, which I did with a student, Evergrande was among the top 10 of all the companies listed in HK in terms of amounts spent on share buybacks relative to total assets. While not a primary cause of its collapse, it is nevertheless a reminder that share buybacks are not necessarily a good thing.
Perhaps an invitation-only roundtable involving different stakeholders using this case would be interesting – something I would consider doing in the coming months.
