Yinguangxia (“YGX”), a corporation listed companies in China, has a lot of media attention since the mid-1990s, captured for its contribution to China’s eco-agricultural industrialization and modernization of traditional Chinese medicine. The amazing leap of their share prices, about 440% in 2000, caused journalists Caijing, a local reputable business magazine to be suspicious and they are investigating on the way to YGX. On 2 August 2001 published an article claiming Caijin YGX misrepresentation e … Read more »

Yinguangxia (“YGX”), a corporation listed companies in China, has a lot of media attention since the mid-1990s, captured for its contribution to China’s eco-agricultural industrialization and modernization of traditional Chinese medicine. The amazing leap of their share prices, about 440% in 2000, caused journalists Caijing, a local reputable business magazine to be suspicious and they are investigating on the way to YGX. On 2 August 2001 published an article claiming Caijin YGX misrepresentation of export activities involving its subsidiary Tianjin sale of biologically-derived products to a German company, Fidelity Trading GmbH. A win overvaluation of U.S. $ 93 million in 1998 -2001 was finally by China Securities Regulatory Commission, and four of the company’s senior officials, including the former CEO and CFO of YGX and Tianjin Guangxia were sent to prison for forgery and fraudulent misrepresentation revealed by Information. The operating license of the company external auditors Zhongtianqin was abolished and the professional certificates of his two chartered accountants were lifted. The scandal resulted in the pursuit of private investors crusade hedge against loss of their investment, the legal protection of private shareholders in China remained a topic of great concern in the country. After a top performer on the Chinese stock market has exposed the shortcomings of the corporate governance system in China YGX the fallout. It also brings the problems in auditing in China lit involved.
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from
Amy Lau
Claudia H. L. Woo
Source: University of Hong Kong
23 pages.
Publication Date: Nov 05, 2007. Prod #: HKU687-PDF-ENG
Yinguangxia: An Epitome of corporate governance deficiencies in China HBR case solution

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