Year: 2016 | Month: November | Volume: 3 | Issue: 11 | Pages: 16-31
What Caused the Failure of Lehman Brothers? Could it have been prevented? How? Recommendations for going forward
Caesar K. Simpson
Swiss Management Center University
The year 2008 was marked by massive failures and collapse of investment institutions globally- revealing flaws in the banking system that required a complete overhaul. In the same year, one of the largest investment firms in the world, the Lehman Brothers, filed for Section 11 bankruptcy thereby throwing both the US and the global financial systems into turmoil. The collapse of Lehman Brothers Holdings Inc. (LEH) had a crippling effect on the global economy with the financial crisis escalating to other parts of the world. In the aftermath of this event, financial institutions froze lending activities thereby creating liquidity problems in the shadow banking financial system. The collapse of this institution could have been avoided were it not for regulatory and corporate governance failures. This paper has analysed what caused the failure of the Lehman Brothers, whether the failure could have been prevented and how this could have been achieved, and finally recommendations for going forward.
Key words: Lehman Brothers, Corporate Failure, Bankruptcy, Corporate Governance.[PDF Full Text]