Will We Ever Learn?

What was the culture at Lehman Brothers like? How did this culture contribute to the company’s downfall?

Unethical culture by senior executives of the company Lehman Brothers is one of the main contributions to the downfall of this organization. According to the legal expert Anton R. Salukis, Lehman Brothers used too much accounting manipulations. Negligence or willful blindness Lehman CEO Richard Fuld, promotes the practice of misleading financial reporting by abusing accounting device, Repo 105. By this accounting manipulation could remove fifty billion of unwanted assets in the balance of 2008 [(Robbins, 2012, p. 147)].

However, researching into the culture of this corporation we deduct that this company was corrupt and the only purpose of the leaders was the appetite for money. Due to the success of the company, the leadership became greedy. This greed motivated them to falsify information that concealed the true financial situation of the company. They became involved in larger operations and greater risk, in order to maintain their image to stakeholders. Lehman Brothers executives used a corrupt strategic plan in order to create an image of a friendly state and excellent financial condition. The Lehman Brothers culture encouraged unethical practices within the employees of the company. Lehman Brothers was a company that had unrealistic plans, and its main objective was money.

What role did Lehman’s executives play in the company’s collapse? Were they being responsible and ethical? Discuss.

The details of the financial policies of the staff of the company, which was formed by a staff of senior managers and financial experts, were what occasioned the fall of Lehman Brothers. Where the arrogance, talent, ambition and greed ended up becoming a powerful time bomb that generated a lot of wealth, but at the end of the term history as one of the main factors that led to the sharp fall of the legendary financial company.

To many experts, the fall of Lehman Brothers was not a surprise, but could have been avoided if common sense had prevailed, for within the major revelations that have emerged, highlighting the warnings that since 2005 had been presented to the president of Lehman Brothers and to the Chief Executive Officer, mentioned that already carried strong warnings on the possible implosion of the housing market and the collapse that the Company was going to face. The refusal of these two senior executives to hear the warnings, which came from the very bosom of Lehman Brothers, reflected the explosive combination, these traits that characterized the behavior of the staff of this financial institution. They were absolutely irresponsible and unethical.

That colossal failure of common sense, which led to the isolation of the chief executive of Lehman Brothers and his closest aides and his subsequent disappearance, should be an important lesson, not only to prevent future disasters like these but set an example for responsible financial management policies, both public and private in the U.S. and worldwide.

After all the public uproar over Enron and then the passage of the Sarbanes-Oxley Act to protect shareholders, why do you think we still continue to see these types of situations? Is it unreasonable to expect that businesses can and should act ethically? (Robbins 147-148)

The Sarbanes-Oxley Act was created by Senator Paul Sarbanes and Representative Michael Oxley in action the countless scandals involving misleading financial reports and concealment of questionable transactions. The purpose of this law is to improve corporate governance and strengthen corporate accountability reports by full disclosure and transparency of financial reporting. Even after the passage of this law, it remains difficult to regulate the free market.

We will still see this kind of fraudulent practices from organizations, as long as there are people corrupted by power and money that will do anything to maintain their status. Our own society promotes this type of behavior because of its emphasis on materialism and individual competitiveness and the belief that white collar crimes are not serious. People who commit white collar crimes receive little or no jail time and experience only brief notoriety, so they continue to carry this type of crime because no one holds them accountable for their actions.

It is reasonable to expect companies to act ethically because it is their moral and social responsibility to maintain fair standards. Everything that happens in business financial economics affects both the company and the economy of a country, and what happens in the economy affects society. Thousands of people lost their jobs when Enron declared bankruptcy. Families lost their savings and their lifestyles. It's a domino effect, when one falls the rest continues to fall. We all have an obligation to respond responsibly and take every mistake that affects us mutually.

References

Robbins, S. P., & Coulter, M. (2012). Management (11th ed.). Retrieved from The

University of Phoenix eBook Collection database.

Sarbanes-Oxley Act 2002. (2006). Retrieved from http://www.soxlaw.com