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Journal of Business Case Studies – November/December 2011
Volume 7, Number 6
Fighting For Control Power Of GOME Inc.:
A Case Study
Yinfang Huang, Hunan University, China
Chia-Hsing Huang, SolBridge International School of Business, Korea
Xueqi Li, SolBridge International School of Business, Korea
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.
Keywords: Shareholder; Professional Manager; Agency Problem
INTRODUCTION
T
he owner, professional manager, the largest shareholder and the CEO of GOME, are fighting for
control power of GOME Inc. The largest shareholder, Huang Guangyu, called a special shareholders
meeting, which is to be held at 2:30 pm, September 28, 2010 on the first floor of Regal Hotels, Hong
Kong. The founder and the largest shareholder, Huang, who is in prison, proposed five items for the agenda which
the the shareholders are to vote on at the meeting. One of the items is to remove the professional manager, Xiao
Chen, from CEO position of GOME. Neither Huang nor Chen hold more than...