A blog: Contemporary finance

The big question is whether fraud in the business world still occurs? Sadly it does and in very prevalent companies. For example Wells Fargo, the American based finance company, in 2016 reports emerged that employees had created fake bank accounts without customers knowing or consenting. The most concerning piece of information I learned from the Wells Fargo scandal was that over 5,300 employees were fired from their jobs relating to the scandal. If 5,300 people were involved how had this been allowed to happen? How had no one spotted these fake accounts earlier? I am still shocked that this level of fraudulent behaviour was able to occur in such a large well known company within America. However, that was not the most shocking fact of this scandal, Wells Fargo admitted to retaliating against workers who tried to inform them about the fake accounts early on in the scandal. The fact that this occurred shows the level of corruption within the company was extremely high and involved...

The Lehman Brothers founded in 1850 was the fourth largest investment bank in the United States before it collapsed in 2008. 2008 was the financial crisis where companies and banks struggled both in the US and across the globe, the crisis was only intensified by the collapse of Lehman Brothers. In the documentary we see the government and heads of wall street gathered to discuss the crisis the Lehman Brothers were having, the government is seen refusing to bail out the Lehman Brothers. This brings me to the question of can we afford to let banks collapse in a financial crisis? Around the same time of the Lehman Brothers collapse UK bank Northern Rock was also on the verge of collapse, this caused widespread panic of the public rushing to remove their money before it went bust. The UK government unlike the US government stepped in just in time to save the bank. Having witnessed first hand the panic caused by Northern Rocks near collapse I can only imagine the panic caused by Lehman Bro...

Although Wall Street is a film and has therefore been made for drama and to entertain the audiences, it is a perfect example of how insider trading works. Charlie Sheen, who plays Bud Fox, begins the film by sharing the smallest piece of information about the company his father works for, however this information has not been made public and he therefore has given away insider information, which is illegal. Bud Fox then gets the job with the company he wants as long as he gets important insider information that would benefit them, in the end he made an awful lot of money from trading inside information. Even though this is a film I believe that it shows in depth what insider trading can do to those involved and affected by it, Buds own father suffers because of his insider trading. . What exactly is insider trading? Insider trading is the use of confidential information that is not yet in the public domain which allows the person an advantage, whether that be buying or selling shar...

Mergers and Acquisitions are often difficult business, and can sometimes turn hostile. A hostile M&A occurs when the acquiring company goes directly to the target companies shareholder. As a manager a hostile takeover is not the situation you ever want to be in, as it implies in the name it can cause hostility and tension within the company. Luckily the majority of Mergers and Acquisitions occur through negotiations and patience. October 2018  saw the merger of Frankie and Benny’s and noodle chain Wagamamas for a deal worth around £559 million. The restaurant group, who also own Chiquito, had seen sales fall by 0.5%, whereas Wagamama had seen climbing revenues from £266m in 2017 to £307m in 2018 in a part of the restaurant market that has been struggling. The casual dining market has been struggling, however, Wagamamas has clearly been doing something right. The Restaurant Groups clear aim is to focus on Wagamamas, they plan to continue to open new Wagamamas and convert some o...

In October 2018 , General Electric slashed their dividend payments to just a penny per share, but what is a dividend and why does it matter? A dividend is the distribution of a percentage of the company’s profits or any surplus money to the shareholders. This distribution can be either cash or shares and it is more common that cash is usually the payment the shareholders receive. A dividend is only a percentage of their profits, the rest of the profits are used to reinvest into the company to improve and upgrade in order to raise profits and share prices . General Electric slashing their dividends to just one penny demonstrates the financial position they are currently in, and that position is; in financial trouble. The higher the dividend payment the larger the profit the company has made,  by reducing g the dividend payment to just one penny General electric is demonstrating to the financial world that they are in trouble .This decision to slash dividends will most likely hav...

In 2017, Apple sold $7billion in corporate bonds in order to raise funds, the question isn’t whether to invest in Apple it is whether to invest in bonds or stock? In order to answer this question you need to decide whether you are a safe investor or one that is willing to take risks. Bonds are a relatively safe bet usually, even more so in the case of Apple, Apple have enough cash reserves that if they stopped trading and didn’t make any more money today they would still be able to repay all the bonds sold. This is why if I was an investor I would invest my money into their bonds rather than  stocks. Stocks are volatile and react to the market and being a technology company which in itself is an ever changing market means that there are significantly higher risks to investing in stocks and shares. Apple are currently struggling in the Chinese markets because of companies such as Huawei who make cheaper alternatives to the iPhone, if this trend occurs in the UK and US markets the...

While watching the documentary The Great Crash of 1929 a question occurred to me could the crash have been predicted or are the stock markets movements completely random like Kendall (1953) suggested? It is clear that the stock markets cannot be completely accurately predicted otherwise the  1929 stock market crash and the 2008 crash would never have been allowed to happen, as well as the fact that we'd all be becoming stock brokers and making a fortune. However I do believe that although the stock markets cannot be accurately predicted I do not believe they follow a random walk either and that there must be some hints as to what will occur in the markets. It surely cant be based on luck can it? Well, the USA was thriving for the 10 years following the war and before the crash, consumerism had  changed and so had the stock markets, they were more widely available to the public and newspapers printed what celebrities of the day were investing in so that the public could cop...

Value management is vital for any business, especially those whose main aim is to maximise shareholder wealth. Also value management is often  the difference between succeeding and failing and in business the line that distinguishes that is a very small one.  A company that has been succeeding In  creating value is everyone’s favourite streaming service Netflix, while these days they are famous for their streaming they originally started off as a DVD by mail company in 1997, and remember blockbuster? They had the opportunity to acquire Netflix back in 2000. Netflix was not always as successful as it is now and in 2001 following the 9/11 terrorist attacks Netflix were forced to sell there shares on the public market a decision that has since added a lot of value and extra cash flow to the company. Fast forward to 2011 and the real shareholder wealth maximisation comes into play. Netflix decided to split there streaming and DVD by mail services, charging $7.99 each, al...