Download pdf
Too Big To Fall: Bankruptcy of Lehman Brothers Holdings Inc. in 2008
- 1 Faculty of Business and Management, Beijing Normal University-Hong Kong Baptist University United International College, Zhuhai, Guangdong Province, China, 519000
* Author to whom correspondence should be addressed.
Abstract
The research background is Lehman Brothers Holdings Inc. (Lehman Bro.) sending Chapter 11 bankruptcy protection application due to extremely high leverage and liquidity lacking towards New York Court in the Subprime Lending Crisis, 2008. This research illustrates the event’s economic background, three critical factors to final bankruptcy and practical solutions from Macro and Micro perspectives. This research adopts the typical case analysis method and concludes that mismatching capital structure with high insolvency risk, not be acquired or purchased for its qualified and inferior assets by other financial institutions or provided timely adequate capital support by American Federal Reserves, agency problem as conflicts of interests between the chief executive officer and his employment's shareholders in risk preference, and finally inappropriate accounting policies without complete disclosure of misconducting Repo105 to reduce debt-equity ratio for external investors are essential reasons account for Lehman Bro. Bankruptcy in 2008 with concrete illustrations in this case analysis research papers.
Keywords
Lehman Brothers Holdings Inc., Subprime Lending Crisis, Bankruptcy, Corporate Governance, Agency Problem
[1]. Qi Jue. (2023, January 24th). Too Big to Fail: The Fall of Lehman Brothers. Zhihu. https://zhuanlan.zhihu.com/p/600805216.
[2]. Cao Y. (2009). Financial Bailouts and Market Fundamentalism. Chinese Financier (07),131-133. doi:10.19294/j.cnki.cn11-4799/f.2009.07.040.
[3]. Yu Yongding. (2008). American subprime crisis: Background, causes and development. Contemporary Asia Pacific, pp. 5, 14–32.
[4]. Li Q. (2009). Another Perspective for Understanding Corporate Failure and Economic Crisis: A Review of Hu Jingsheng's Convex Incentives: Research on Stock Options-Related Issues. Dong yue lun cong, 7, 7. 191-191.
[5]. Wang Y. (2009). Optimal allocation of managers' stock options. Zhejiang social sciences (12), 17+10-125 doi: 10.14167 / j.z JSS. 2009.12.019.
[6]. Ren Chuanpu. (2012). Equity incentive system from the bankruptcy of Lehman Brothers. China Economic and Trade Herald, pp. 20, 48–49.
[7]. Xiong Y. &Hao J. (2008, October 18th). Here is how Lehman Brothers got their high salaries. Chinesetimes.net.cn. https://www.chinatimes.net.cn/article/699.html.
[8]. Demos, T., & Braithwaite, T. (2012). Mixed ruling in Lehman-JPMorgan dispute. FT.com.
[9]. Wang Y. (2009). Optimal allocation of managers' stock options. Zhejiang social sciences (12), 17+10-125 doi: 10.14167 / j.z JSS. 2009.12.019.
[10]. Chen S. &Chen Y. (2012). Analysis of the audit of Lehman Brothers Bankruptcy. Commercial Research, 8, 1-7. https://doi.org/10.3969/j.issn.1001-148X.2012.08.001
Cite this article
Yang,S. (2023). Too Big To Fall: Bankruptcy of Lehman Brothers Holdings Inc. in 2008. Advances in Economics, Management and Political Sciences,61,64-70.
Data availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
Disclaimer/Publisher's Note
The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.
About volume
Volume title: Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and
conditions of the Creative Commons Attribution (CC BY) license. Authors who
publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons
Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this
series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published
version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial
publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and
during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See
Open access policy for details).