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Failure of Control Environment of Daewoo Shipbuilding & Marine Engineering Co., Ltd

Author

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  • Hansol Lee

    (School of Business, Yonsei University, Seoul, Republic of Korea)

  • Seung Wan Eun

    (School of Business, Yonsei University, Seoul, Republic of Korea)

  • Ho-Young Lee

    (School of Business, Yonsei University, Seoul, Republic of Korea)

  • Gitae Park

    (Management School, Lancaster University, UK)

Abstract

In July 2015, one of the biggest shipbuilding and marine engineering companies in Korea, Daewoo Shipbuilding & Marine Engineering Co., LTD (DSME), suddenly reported operating losses of 2.73 billion USD, resulting in chaos and frustration of investors and market participants. The announcement of this huge loss was the result of an accounting fraud conducted by the management team. Adam Kim, the former CEO of the company, concealed 4.5 billion dollars of losses by manipulating the accounting performances. This case exemplifies the results of the weak control environment. This paper examines the consequences of the weak control environment and ineffective monitoring activities of DSME.

Suggested Citation

  • Hansol Lee & Seung Wan Eun & Ho-Young Lee & Gitae Park, 2019. "Failure of Control Environment of Daewoo Shipbuilding & Marine Engineering Co., Ltd," Asian Case Research Journal (ACRJ), World Scientific Publishing Co. Pte. Ltd., vol. 23(02), pages 561-593, December.
    • Handle: RePEc:wsi:acrjxx:v:23:y:2019:i:02:n:s0218927519500238
    DOI: 10.1142/S0218927519500238
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