Asia Pulp and Paper Company Ltd.

This case illustrates the rise and fall of Asia Pulp and Paper, the biggest bankruptcy in the history of emerging-market finance. In the mid1990s, Asia Pulp and Paper embarked on an aggressive expansion strategy, a cornerstone of which was massive investment in paper production capacity in China. This capacity expansion was financed by large-scale issuance of debt and equity in major financial markets. Even after problems with the firm's expansion strategy became evident, financial market analysts continued to recommend the company to international investors. As the firm collapsed under its debt, these investors were forced to learn some hard lessons in the risks of overexpansion in a commodity business, the corporate governance problems associated with family-dominated conglomerates in Southeast Asia and the dangers of relying too heavily on the analyses of investment banks with conflicts of interest.