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Case Study

Etihad Etisalat Company (Mobily)

By Didier Cossin and Abraham Hongze Lu

11 pages

December 2015

Reference: IMD-7-1692

In November 2014 Saudi telecom company Etihad Etisalat (Mobily) cut its profits and revenues for 2013 and for the first half of 2014 due to excessive booking of revenues. An unprecedented scandal hit the business community in Saudi and $9.1 billion of Mobily’s market value was wiped out. The scandal sparked an investigation by the Capital Market Authority (CMA) in order to send a strong signal to incoming foreign investors. Mobily CEO and Managing Director Khalid Al Kaf was removed from his position. Board members and senior executives might be prosecuted for insider trading violations. The Mobily shock would have a long-lasting impact on market.

Learning Objective

Mobily case helps participants understand behavior biases of corporate leaders, which might be reflected in their narratives. The case also helps board reflect its role in responding to an accounting scandal and in monitoring management. For example, how board and management could have done differently to minimize the negative impact? How well do we understand the CMA regulatory objectives, requirements and consequences?

Keywords

Telecommunication, Regulation, Integrity, Ethics, Board, Scandal, Certified Management Accountant, Investigation, Prosecution

Settings

Middle East, Saudi Arabia
Etihad Etisalat, Services, Telecommunications
2015

Type

Published Sources

Available Languages

English

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