Publications
Publications
- November 2017 (Revised August 2018)
- HBS Case Collection
Fair Value Accounting at Noble Group (A)
By: Siko Sikochi, Suraj Srinivasan and Quinn Pitcher
Abstract
Noble Group was a large commodities trader based in Hong Kong and listed on the Singapore Stock Exchange. In 2012, Noble shifted its business strategy towards an asset-light model. Under this model, Noble did not own mines or farms to produce commodities but built commodity sourcing capacity by working with and investing in producers in exchange for purchase and marketing contracts. Noble also worked with customers to secure supply contracts. Noble had a portfolio of 12,000 commodity contracts by the end of 2014. The contracts were measured at fair value. Iceberg Research, an anonymous blog, released a series of reports starting in February 2015 alleging that Noble was too aggressive in its fair value accounting for contracts and investments in producers. Iceberg did not accuse Noble of fraud but suggested that Noble’s profits and balance sheet were highly inflated and Noble was headed for disaster. The case explores Noble’s business and the valuation of its contracts.
Keywords
Citation
Sikochi, Siko, Suraj Srinivasan, and Quinn Pitcher. "Fair Value Accounting at Noble Group (A)." Harvard Business School Case 118-034, November 2017. (Revised August 2018.)
About The Authors
