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Please use this identifier to cite or link to this item: http://hdl.handle.net/11375/22520
Title: Home Capital Group: the high cost of dishonesty
Authors: Brown, Kareen
Veenstra, Kevin
Michael Lee-Chin & Family Institute for Strategic Business Studies
Department: None
Keywords: Corporate governance;Corporate social responsibility (CSR);Accounting theory;Banking
Publication Date: Jan-2018
Series/Report no.: Michael Lee-Chin & Family Institute for Strategic Business Studies Working Paper ; 2018-03
Abstract: This instructional case presents the problems that began in the summer of 2015 when Home Capital Group (HCG) announced it had cut ties with 45 mortgage brokers for falsifying figures on mortgage applications regarding the earnings of prospective home purchasers in Canada. The case details the subsequent investigation by the Ontario Securities Commission in 2017 that resulted in a run on the bank and consequent efforts by HCG to stay afloat. While emphasizing the importance of strong corporate governance and Corporate Social Responsibility (CSR) initiatives, this case also stresses the influence of various stakeholders including short-sellers, regulators, shareholders, management, depositors, and customers in the evolution of subsequent events. As a whole, this case provides an interesting context for the discussion of stock market efficiency. Valuation Insight: This case study of Home Capital Group provides insight into the importance of Corporate Social Responsibility and corporate governance, as well as the role of short-sellers, regulation, and outside investors in the determination of a company’s market value.
Description: 24 p. ; "January 11, 2018." ; The authors "are thankful for constructive comments and suggestions from two reviewers. Veenstra gratefully acknowledges the financial support of McMaster University."
URI: http://hdl.handle.net/11375/22520
Appears in Collections:Michael Lee-Chin and Family Institute for Strategic Business Studies
Michael Lee-Chin & Family Institute for Strategic Business Studies Working Paper Series

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