The Case of Robbins Communications Write-Up

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Based the given information, the investors had certainly made a wrong decision to invest in Robbins Communications. Though they had hired a professional accounting firm to audit the books of the company, the accounting firm failed to find out a basic mistake of RC. Looking back, if I was the investors, I would first conduct a deeper research of the potential of the company before considering the investment. After that, I might choose to hire multiple accounting firms and financial experts when evaluating the finance of RC. Not only would I pay attention to the financial documents of the company, but also how the company operated in the past. Were the regulations and rules clear? Was there a standard management procedure? How was the company governed before? If I decided to invest in the company, I would create a more diverse and competent board with some experts in law and finance. This would help to make better decision, but more importantly might discover the problems in the accounts earlier and have more effective risk management. Also, I would not actively seek an executive position at the beginning since I was not familiar with the business of the company at first. Attending board meeting and observing for about one year might be my choice.

It was ironical to find that the improvement in corporate governance of RC could not prevent a company’s fail because of its past mistakes. However, if Jack could pay more attention to the governance of the company and had independent auditors earlier, this kind of mistakes might not happen. This inspired me that corporate governance was something that should be pay attention to from the early stage of companies.

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