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Essay / Research Paper Abstract
A 4 page paper discussing management’s deficiencies and the costs to small business in Australian resulting from the collapse of HIH Insurance. Executives in companies such as these appear to share several common characteristics, among them loss of sight of their responsibilities to customers, shareholders and employees. In the case of HIH Insurance, the company’s collapse adversely affected far more than only those directly associated with the company. Bibliography lists - sources.
Page Count:
4 pages (~225 words per page)
File: CC6_KSmgmtHIHaus.rtf
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Unformatted sample text from the term paper:
The year 2001 certainly was the worst in accounting firm Arthur Andersens history. It was a material factor in the collapse of HIH Insurance Ltd., and
it directly contributed to the collapse of Enron in the United States. Andersen alone could not wield such power; it needed the cooperation and knowledge of the senior management
of those companies. Executives in companies such as these appear to share several common characteristics, among them loss of sight of their responsibilities
to customers, shareholders and employees. In the case of HIH Insurance, the companys collapse adversely affected far more than only those directly associated with the company. Management Deficiencies
The most glaring deficiency in HIHs management obviously was the lack of integrity that allowed it to operate without any regard for governance issues.
An example of this type of behavior can be seen in HIHs sale of its largest and most profitable business. Management committed the company to the sale, placing
it "on the market without first telling the board, in a deal that helped precipitate Australias biggest corporate collapse" (White, 2002; p. 3). The board heard of the deal
only a week before it was completed. Chief executive Ray Williams raised the issue with board members over dinner, telling the group that "HIHs finances had deteriorated and it
was selling the business because we need to" (White, 2002; p. 3). Rather than allowing HIH to use the $325 million received for the sale as it pleased, the
Australian government required that the entire amount be placed in trust for disbursement to those with whom HIH held obligations. The bottom line
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