Estimation Techniques of Financial Crisis
The unquestionable ethical conducts within the corporate circle had been the major factor that led to 2008/2009 financial crisis. By studying the root causes of the crisis, it has been revealed that bad conducts among the CEOs of Bear Stearns, Lehman Brothers, Citigroup and Countrywide Financial have been the primary factors leading to 2008/2009 financial crisis.
Objective of this paper is to argue that the CEOs of Bear Stearns, Lehman Brothers, Citigroup and Countrywide Financial did not take the interest of the companies into a consideration leading to frictions between the CEO and the shareholders
In 2007, the financial markets were shaken by a serious financial crisis because of a dryness in liquidity associated with a subprime mortgage business where people with doubtful credit reports were offered mortgage loans leading to a rise of loan default. Moreover, lack of transparency, greediness and excessive desire for money have been the major factors that led to the financial crisis. (Gorton, 2008). The greediness was demonstrated among the CEOs of Bear Stearns, Lehman Brothers, Citigroup and Countrywide Financial where all of them increased their compensation packages without putting the companies' and shareholders' best interests into considerations. Traditionally, the Bear Stearns, Lehman Brothers, Citigroup and Countrywide Financial were publicly traded companies and raised largest percentages of their liquidity from shareholders' funds. Thus, their primary obligations are to protect the interests of the companies and shareholders. However, the CEOs of these companies did not respect these obligations rather they indulged in the risky businesses that consequently eroded the shareholders'
"These companies did so at the expense of millions of ordinary Americans and investors of all types -- including other financial institutions, universities and pension funds, cities and towns, and even hospitals and religious charities," Holder said at a news conference announcing the settlement." (Tucker, 2014 p 1).
Despite several warnings from financial experts about the associated risks of subprime lending, the CEOs of the companies were not pursuing the interest of the companies rather they went ahead to increase their compensations. An expert in stock trading had warned the Citigroup that "he would not be surprised if half of these loans went down it was amazing that some of these loans were closed at all." (Tucker, 2014 p 1). Despite this warning, the CEOs of the Citigroup and Countrywide Financial increased their compensations to $25 million and $43 million respectively. The CEO of Bear Sterns also increased his compensation package to $34 million in 2006. In the same year, CEO of Lehman Brothers increased his compensation to $27 million. (Larcker, & Brin, 2010). However, these executives did not compensate their companies with revenues…
Goal setting works well for simple jobs -- clerks, typists, loggers, and technicians -- but not for complete jobs. Goal setting with jobs in which goals are not easily measured (e.g., teaching, nursing, engineering, accounting) has posed some problems. Goal setting encourages game playing. Setting low goals to look good later is one game played by subordinates who do not want to be caught short. Managers play the game of setting
Managerial and Financial Accounting Case Managerial Accounting - Variable Costing Managerial accounting emphasizes short-term profit analysis, income statement important. Consequently, 'll examine discuss income statements case. Managerial and Financial Accounting Financial and managerial accounting basic difference comes on the uses. While, financial accounts are prepared for use by external parties, managerial accounts are prepared for use internally. The process of preparing the accounts in both financial and managerial accounting use similar source for
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public budgeting comparisons of the federal, state and local budget distributions. This thesis will be focused on whether or not the increased budget allocations for transportation in the federal, state and local government will enhance travel security, efficiency, performance measures and R&D development in the domain. The thesis will start off with a proposal for an agency that works across and is allocated budget in all the federal, state
Delphi Study: Influence of Environmental Sustainability Initiatives on Information Systems Table of Contents (first draft) Green IT Current Methods and Solutions Green IT and energy costs Green It and Email Systems Green IT and ICT Green IT and ESS Green IT and TPS Green IT and DSS Green IT and other support systems Green IT and GHG reduction Green IT and the Government Sector Green IT and the Corporate Sector Future Prospects of Green IT in the software industry The paper focuses on how the