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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

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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.

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