RUNNING HEAD: AMERICAN AIRLINES American Airlines and US Airway’s Merger By Aveon Sims Strayer University BUS 508 Contemporary Business Professor Jean Fonkoua August 24, 2014 Abstract American Airlines has suffered tremendous profit losses over the last few years. The losses have been so great that the company filed Chapter 11 bankruptcy. The news for the Chapter 11 bankruptcy protection was a shock to many, considering the fact that they had enough money to operate and cover their losses through the following year. The merger indeed was a great decision on behalf of American Airlines. The merger itself was questionable.
These scandals cost investors billions of dollars when the share prices of affected companies collapsed, and shook the publics’ faith in the security markets. When examining the SOX act you can see that since 2002 many things have changed in the past eight years. Corporate governance is one of many things that have changed; Public companies must now have a totally separate audit committee composed of entirely independent directors and must contain one financial expert. Security fraud now has much more extreme punishments for those who commit or conspire to commit fraud. Since the introduction of SOX auditors of public companies must keep documentation of an audit for seven years, destruction of any documentation or evidence that someone has committed fraud is now punishable by jail time and fine.
Koss Corporation Corporate Governance, Internal Control, and Ethics What When Wrong? 1. Review the fraudulent activities. What went wrong? Describe what internal controls were missing or circumvented. Consider the Sarbanes-Oxley Act of 2002 (SOX) requirements, and review the definition of internal controls.
This source is relative to my paper discussing auditing collusion because it discusses collusion as a whole in a corporation. Currie III, D. (2003). ANALYZING FAILURES. CPA Journal, 73(2), 21. Retrieved from EBSCOhost.
The biggest victim of the Lehman Brothers’ downfall was its investors. In weeks leadings up to the downfall, investors, unaware of the storm brewing within, were still being sold its financial products.4 This caused a loss of significant wealth for many when the company collapsed. A great amount of public trust was also lost. As Lehman Brothers is one the biggest financial institute in the world, its collapses caused ripples in the financial world, eventually contributing to the financial crisis. What Could Have Been Done Differently The ego of the top management doomed the company.
The Great Depression lasted in America for at least ten years, but it took twenty-seven years to get the economy back above depression levels. To this day, the reasons that lead to the Great Depression are still being debated; although there are a few reasons that historians and ecoomics have agreed on. Such as, the stock market crash that occurred on October 29th of 1929. This happened when a few investors began selling their stocks, because they thought the bull market was going to end soon. The bull market was when prices were rising due to automobiles; steel was selling at a record high but was going down very fast.
Enron Failure Enron Corporation started with Kenneth Lay merging two regional gas pipeline companies and evolving into the largest and most successful companies in the energy field. In the 1990s the energy industry changed around the world and Enron saw the opportunity to go global buying companies from United Kingdom to Latin America to India. However, Enron’s leadership were ambitious they want to be the biggest energy industry in the United States and the world. The result of the ambitious plan the company began to expend and invert with no control then the leadership started to opaque financial reports and creating off- balance sheet by private companies to provide the liquidity it needed for the rapid growth of the trading operations. The company change how to managed the business by conservative engineers in a low risk environment to an entrepreneurial, innovative corporate culture where people were creating new products, opening new markets, and reinventing a new whole business model, but the story of this big and innovative company turn for the worst Enron filed bankruptcy in December 2001.
The company took risky dealings but continued to make billions of dollars every year. The most disturbing part is that the CEO had openly admitted his suspicions of the AIG Financial Products unit. Right before the company collapsed, AIG had accessed over $60 billion in probable subprime mortgage losses. In 2008, AIG’s problems caught up with them. The bailout was a kind of derivative call credit default swaps which are financial products that transfer the risk of the bonds between the parties.
Franklin D. Roosevelt and the Success of His New Deal The American economy started weakening by the middle of the1920s. However, over investment and speculating in stocks inflated their prices that contributed to the delusion of a robust economy. Since stocks were the hottest commodity to invest in, people borrowed money and used their stocks as collateral to the banks.The Great Depression was considered started on Black Thursday October 24th, 1929 when the New York Stock Exchange collapsed in the greatest market crash with the Dow closed at 316.38, and the plunge continued until the Dow reached its low of 41.22 in 1932. When the stocks values dropped, people were not able to pay for their debts while the banks just held worthless collaterals. Many banks declared bankruptcies because they could not get back their money from stock investors.
Running Head: ENRON SCANDAL Examining a Business Failure: Enron Scandal Christy Devore University of Phoenix Examining a Business Failure: Enron Scandal Enron started as a Natural Gas Pipeline Company in 1985 as Houston Natural Gas and InterNorth merged (Thomas, 2002). It became a real trading powerhouse as it started trading energies and launched into new markets. At the end of 2001 it was revealed that its reported financial condition was sustained substantially. Enron had indulged in a financial scandal, involving itself and its accounting firm. The irregular accounting practices, including manipulating stock prices, caused Enron to have to file bankruptcy in December of 2001 (Thomas, 2002).