Case: Masisa Venezuela - An Uncertain Ocean

Abstract

MASISA was a Chilean business group dedicated to the manufacture and marketing of wooden boards and which was present in Latin America with a significant volume of exports to other continents. This case focuses on the opera-tions of its Venezuelan subsidiary between 2015 and 2018, when the financial position and economic results of this sub-sidiary were affected by a hyperinflationary process and a significant devaluation of the exchange rate as a consequence of a deep economic crisis in which Venezuela had been immerse. These exogenous factors caused MASISA to lose economic control of its operations in said country, which led to the Board of Directors to make the decision to deconsol-idate MASISA’s operations in Venezuela in October 2018. Andreas Eggenberg, Chairman of the Board of MASISA, after reviewing the financial statements for 2018 on March 31, 2019, raised a series of accounting questions about the effects that the deconsolidation of the subsidiary would entail: Was the deconsolidation of the Venezuelan subsidiary irreversible? What would be the managerial implications of the hyperinflationary situation in Venezuela for the future of MASISA?