Corporate Governance Failure and Creative Accounting: A Case Study of the Satyam Computer Services Scandal
Abstract
The Satyam Computer Services scandal is a landmark case of fraudulent corporate activity, which has demonstrated serious gaps in corporate governance, accountability, and financial reporting systems in India. The comparison of Enron, WorldCom and Satyam reveals that corporate accounting fraud is an increasing menace in terms of frequency and magnitude. As empirical evidence has revealed, the sheer level of increase in such frauds has undermined the quality of financial reporting, caused massive economic losses and undermined the confidence of investors in the utility and credibility of financial reporting. The rising trend of white-collar crimes requires tougher punishments, exemplary punitive actions, and sound administration of the law in accordance with accountable governance. This study presents an inquiry and analysis of the Satyam Computer Services creative accounting scandal, highlighting the critical role played by ethics and corporate governance, using data sourced from Scopus and following PRISMA guidelines, with no restrictions on publication year and based on predefined keywords along with clearly defined inclusion and exclusion criteria. The example of the fraud committed by the founders in 2009 is the illustration of the way the science of conduct may be deeply impacted by human greed, ambition, and desire to dominate power, wealth, fame, and recognition. Satyam fell into a tunnelling effect unlike Enron which experienced agency problems that lead to its downfall. The scandal highlights the importance of securities laws and corporate governance in the emerging market. In fact, the Satyam fraud has given the Indian government the impetus to increase the norms of corporate governance so as to ensure that similar frauds do not recur. As such, significant financial reporting frauds should be examined with the aim of learning and approaches to be taken to curb such events in the future.
References
Bhasin, M. L. (2013). Corporate Accounting Fraud: A Case study of Satyam Computers Limited. Open Journal of Accounting, 02(02), 26–38. https://doi.org/10.4236/ojacct.2013.2200
Bhasin, M. L. (2016). Creative Accounting Practices at Satyam Computers Limited: A Case Study of India’s Enron. International Journal of Business and Social Research, 6(6), 24–48. https://doi.org/10.18533/IJBSR.V6I6.948
Bhasin, M. L. (2016). Fraudulent Reporting Perpetuated by CEO’s Team: Unveiling the Sayam ‘Modus Operandi.’ 1(2), 46. https://doi.org/10.20849/ABR.V1I2.97
Bhasin, M. L. (2016). Fraudulent Reporting Practices by Satyam. Path of Science, 2(10), 2. https://doi.org/10.22178/POS.15-4
Bhasin, M. L. (2016). Fraudulent reporting practices: the inside story of India’s Enron. Social Science Research Network. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2865595
Bhasin, M. L. (2016). Fraudulent reporting practices: the inside story of India’s Enron. Social Science Research Network. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2865595
Button, M., Lewis, C., & Tapley, J. (2014). Not a victimless crime: The impact of fraud on individual victims and their families. Security Journal, 27(1), 36–54. https://doi.org/10.1057/SJ.2012.11
Choi, J. H., & Gipper, B. (2019). Fraudulent Financial Reporting and the Consequences for Employees. Social Science Research Network. https://doi.org/10.2139/SSRN.3346759
Correspondent, H. (2014, July 15). Sebi orders Satyam’s Raju, others to pay Rs 1,849 cr| Business News. Hindustan Times. https://www.hindustantimes.com/business/sebi-orders-satyam-s-raju-others-to-pay-rs-1-849-cr/story-oFmSOaeDUaYPZ7JCCKDwZO.html
Deb, S. S., & Deb, S. (n.d.). The rise and fall of Enron: A cautionary tale of corporate greed and betrayal. International Journal of Multidisciplinary Research and Growth Evaluation. https://doi.org/10.54660/.ijmrge.2023.4.5.94-100
Eining, M. M., Hurtt, D., Hurtt, R. K., & Richards, C. (n.d.). Status of Non-Profits and Fraud: an Exploratory Study of Risks, Controls, and General Organizational Characteristics. https://doi.org/10.2308/jfar-19-008
Fenge, L.-A., & Lee, S. (2018). Understanding the Risks of Financial Scams as Part of Elder Abuse Prevention. British Journal of Social Work, 48(4), 906–923. https://doi.org/10.1093/BJSW/BCY037
Grisanti Belandria, A. (2016). Los fraudes en las organizaciones y el papel de la auditoría forense en este contexto. 6, 11–36. http://erevistas.saber.ula.ve/index.php/sapienza/article/view/7823
Haugen, S., & Selin, J. R. (1999). Identifying and controlling computer crime and employee fraud. Industrial Management and Data Systems, 99(8), 340–344. https://doi.org/10.1108/02635579910262544
Hernández. (n.d.). Lecciones Del Caso Enron. https://doi.org/10.51302/rcyt.2002.16441
Investigating fraud at Satyam. (n.d.). World Finance. https://www.worldfinance.com/news/investigating-fraud-at-satyam
Jimmy, F. (2024). Phishing attackers: prevention and response strategies. https://doi.org/10.60087/jaigs.v2i1.249
Lam, W. M. W. (2009). India’s Enron: The Satyam Accounting Scandal. Social Science Research Network. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1598039
Liu, X. F., Ai, Y. L., Jiang, L., Wang, X., & Wu, Y. (2024). Understanding the human element in scams: a multidisciplinary approach. Journal of Information Technology Case and Application Research, 1–16. https://doi.org/10.1080/15228053.2024.2439192
Mangala, D., & Kumari, P. (2015). Red Flag: A Mean for Preventing and Detecting Corporate Fraud. Social Science Research Network. https://doi.org/10.2139/SSRN.2988594
Pandey, S. N. (2024). A Study on Financial Scams of the Financial Market in India. Indian Scientific Journal Of Research In Engineering And Management, 08(06), 1–5. https://doi.org/10.55041/ijsrem35643
Patni, J. S., Sharma, A. D., & Singh, N. (2025). Psychological Triggers in Phishing Attacks. 341–358. https://doi.org/10.4018/979-8-3693-8784-9.ch016
Pouryousefi, S., & Frooman, J. (2023). The Consumer Scam: An Agency-Theoretic Approach. https://doi.org/10.32920/24148233.v1
Schaper, M., & Weber, P. (2012). Understanding Small Business Scams. Journal of Enterprising Culture, 20(3), 333–356. https://doi.org/10.1142/S0218495812500148
Schaper, M., & Weber, P. (2012). Understanding Small Business Scams. Journal of Enterprising Culture, 20(3), 333–356. https://doi.org/10.1142/S0218495812500148
Seyam, Y., Seyam, O., Salama, N., & Seyam, A. (2018). An Overview of Fraud in Nonprofit Organizations and the Appropriate Approach to Prevent It. 1(2), 183. https://doi.org/10.22158/IJAFS.V1N2P183
U.S. Securities and Exchange Commission. (2011, April 5). SEC charges India-based affiliates of PWC for role in Satyam accounting fraud (Press Release No. 2011-82).
Upadhya, S. (2022). Accounting fraud in corporate: case study on satyam computers limited. International Journal of Engineering Applied Sciences and Technology, 7(6), 391–395. https://doi.org/10.33564/ijeast.2022.v07i06.046
Vadhrya, S. (n.d.). Accounting Fraud with Reference of Satyam Company. https://doi.org/10.48175/ijarsct-658
Vlad, M., Tulvinschi, M., & Chiriţă, I. (2011). The Consequences of Fraudulent Financial Reporting. USV Annals of Economics and Public Administration, 11(1), 264–268. https://ideas.repec.org/a/scm/ausvfe/v11y2011i1(13)p264-268.html
Weber, P., Schaper, M., Teo, S., & Geneste, L. (2011). Small business scams: a preliminary overview and investigation. 1–20. https://espace.curtin.edu.au/handle/20.500.11937/47853
Yusoff, Y. H., Jumbli, S., Norazman, N. N., Razak, N. S. B. A., & Hashim, M. R. (2024). Enhancing Anti-Money Laundering Strategies: A Conceptual Paper. Accounting and Finance Research, 13(3), 1. https://doi.org/10.5430/afr.v13n3p1
