230k views
1 vote
What do the following corporations have in common?

a.Enron (energy and utilities)
b.Lehman Brothers (Wall Street financial services firm)
c.Madoff Investment Securities (Wall Street investment firm)

1 Answer

4 votes

Final answer:

Enron, Lehman Brothers, and Madoff Investment Securities suffered major corporate scandals involving financial malpractice, with Lehman Brothers' bankruptcy in 2008 due to lack of corporate governance, heralding a global financial crisis.

Step-by-step explanation:

Enron, Lehman Brothers, and Madoff Investment Securities are all infamous for significant corporate scandals and failures related to financial malpractice. Enron collapsed due to accounting fraud, and Lehman Brothers, a major Wall Street financial services firm and the fourth largest U.S. investment bank, filed for Chapter 11 bankruptcy on September 15, 2008, marking a pivotal moment in the global financial crisis. The failure of Lehman Brothers was attributed to a lack of corporate governance, where the Board of Directors did not prevent executives from taking on excessive risk. Additionally, Bernie Madoff's firm was responsible for a massive Ponzi scheme.

The Lehman Brothers bankruptcy is a particularly stark example. Despite the firm's long history and large size, with 25,000 employees, a court examiner's report and testimony to Congress by Tim Geithner highlighted significant failures in oversight, board engagement, and a misguided emphasis on short-term gains without adequate risk consideration. This event was a key indicator of the systemic issues within the financial market leading up to the economic crisis.

User Steven Newstead
by
8.6k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.