The case on ABIL deals with the important issue of corporate governance, and particularly the crucial role that the board of directors plays. It highlights the complex issue institutional investors face when trying to assess the strength of a board and the quality of information and disclosure. The case is set in South Africa which is an emerging market.
The case targets MBA students and can be taught as part of a corporate governance or sustainable and responsible investment module or course. The case is aimed at both local and international students as the case deals with corporate governance principles that are applicable to both audiences. Where necessary, the case provides information to guide international audiences.
The teaching case is set on 6 August 2014 when Ian Matthews, the Head of Equities at a South African Asset Manager, BG Wealth, gets a call while on leave. The call is from his boss, chief investment officer, Deryck Medley, informing him of the negative trading update and asking him to come back to prepare for an emergency investment committee that afternoon. The case traces Matthews’ day as he reviews the research reports BG Wealth had put together on ABIL over the previous 15 months. Matthews also recalls the process the investment team went through internally before finally deciding to invest in the company. The case highlights not only the corporate governance failures of ABIL but also the lack of consideration given to ESG factors by BG Wealth.
Expected learning outcomes
The case’s primary teaching objective is to highlight the importance of corporate governance. The case provides detailed insights into the area of corporate governance through the analysis of a corporate failure. Through this teaching case, the students will follow the real-life events that led to the collapse of ABIL. It is intended that the students will be forced to deal with a complex situation and will be required to develop specific solutions to the issues raised.
Teaching notes are available for educators only. Please contact your library to gain login details or email firstname.lastname@example.org to request teaching notes.
CSS 1: Accounting and Finance.
Disclaimer: This case study was prepared by Associate Professor Stephanie Giamporcaro who is affiliated with the Graduate School of Business, University of Cape Town, and the University of Nottingham Trent Business School; and Matthew Marrian. This case study depicts actual events regarding the events that led up to the collapse of ABIL. However, BG Wealth is a fictional organisation which was loosely inspired by the positions taken by some South African institutional investors during the period described in the case study. Copyright © 2017 Case Writing Centre, GSB, UCT. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any forms or by any means electronic, mechanical, photocopying or recording without the permission of the centre. This document is intended to be used as a basis for class discussion and is not intended to illustrate effective or ineffective handling of a management or administrative situation.
Giamporcaro, S. and Marrian, M. (2018), "African Bank Investment Ltd (ABIL): a South African corporate governance failure", Emerald Emerging Markets Case Studies, Vol. 8 No. 2. https://doi.org/10.1108/EEMCS-05-2017-0094Download as .RIS
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