The Politics of Financial Risk, Audit and Regulation
A Case Study of HBOS
The biggest corporate failure ever in British history occurred in 2008 with very little forewarning. The management of HBOS, a major national bank with a long history of prudence prior to the merger in 2001, were allowed to act incompetently. Auditors and regulators failed to act, ignoring a key senior whistleblower, and the ‘competitive’ stock market failed to spot management failure in time.
This book is the first academic study of this collapse, uncovering some surprising evidence on the power and politics of large financial institutions. It details the processes and degrees to which financial challenge and regulation are undermined by this power. The research exposes a pro-active process of regulatory risk management by these institutions; the ease with which auditors and regulators can be captured; and how politicians and investors can be all too happy to hop on the stock market and management spin ride – with other people’s money. The study questions the ideology and politics which supported and encouraged the management hubris, raising profound questions about the ‘politics’ of the academic disciplines of banking, finance and accounting today, and the theories they underpin.
This account of management gone wrong is essential reading for students, researchers and professionals involved in banking, finance, credit infrastructure, economics and management studies.
Table of Contents
Foreword by Ian Fraser
2. About HBOS
3. The Politics of Risk Management
4. The Chemistry of Audit Failure
5. Regulatory Failure
6. Findings and Implications for Finance Teaching and Research
Atul K. Shah is a Chartered Accountant and member of the Institute of Chartered Accountants in England and Wales. He has a PhD in Accounting and Finance from the London School of Economics. He is also a Professor in Accounting and Finance at Suffolk Business School, Ipswich, UK.
‘Professor Shah has produced an unconventional, emotional and invaluable post-mortem of the ethical dimensions of the HBOS scandal. It calls on our business schools to help students cope with the deep moral challenges they are likely to face in an increasingly amoral business world. En-route, he holds up Paul Moore as the exemplar of what is needed. But the whole establishment, is implicated.’ — Andrew Phillips (Lord Phillips of Sudbury)
'In The Politics of Financial Risk, Audit and Regulation: A Case Study of HBOS, Atul K. Shah examines the HBOS collapse of 2008, and uses it as a platform to more broadly critique the ways in which finance is regulated by governments and the audit profession and conducted in practice, its uneasy relation to politics and authority and the manner of its teaching in tertiary educational institutions globally.' — Dr. Prabhu Sivabalan is an Associate Professor at the UTS Business School (LSE Review of Books)