Corporate Governance and Its Determinants: A Study on Wells Fargo Scandal

Mohd Nor Zamry, Nur Syafinaz (2019): Corporate Governance and Its Determinants: A Study on Wells Fargo Scandal.

Abstract

Despite having the perfect board, Wells Fargo was hit with a scandal in 2016 as a result from its cross-selling tactics and intense pressure to its employee to achieve impossible targets. Due to its decentralized management, fake accounts were created without customer knowledge, sometimes forging their signatures. This study aims to investigate the impact of corporate governance index in relation to bankruptcy, firm value, company performance and macroeconomics. Multiple regression analysis is applied on the sample of five years of Wells Fargo data from the year 2014 to 2018. The findings shows that corporate governance index has been influenced and affected by internal factors specifically by return on asset (ROA). Moreover, there is a moderate significant relationship between corporate governance index and unemployment rate. The analysis further explained that ROA negatively influence CGI which supports the results from Wells Fargo decentralized management that led to the crisis of the firm.

• Item Type: MPRA Paper
• Language: English
• Keywords: corporate governance index, return on asset (ROA), Wells Fargo Scandal
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance; G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior

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