Fighting For Control Power Of GOME Inc.: A Case Study

Abstract

At 2:30pm, September 28, 2010, a special shareholder meeting for GOME is called by the largest shareholder of GOME, Guangyu Huang, to be held on the first floor of Regal Hotels, 88 Yee Wo Street, Causeway Bay, Hong Kong. GOME Electrical Appliances is one of the largest electrical appliance retailers in Mainland China and Hong Kong. Huang Guangyu, the founder and largest shareholder of GOME, is currently in jail. The purpose of this meeting is to vote on the eight items on the agenda, including deposing the professional manager, Xiao Chen, from the CEO position of GOME. Should the investors support the largest shareholder or the professional manager? It may be the toughest problem GOME has faced in its history. It seems that no matter who wins, the result may not be good news to GOME and its investors. This case is about corporate governance and agency problems and is appropriate for undergraduate and graduate courses in Investment, Corporate Finance and Financial Markets.