Background Of Lehman Brothers Holdings Inc
Background of Lehman Brothers Holdings Inc.
Lehman Brothers Inc. is a comprehensive and diversified investment bank, which services the financial needs for global companies, institutions, governments and investors (RYBACK.W). Since Lehman Brothers was established in Montgomery in Alabama in 1850, it has experienced the American Civil War, two world wars, the Great Depression,‘9‧11 'attack Strike and an acquisition. However, it still survive, and it was called as ‘19 Mania cat’ by Roy Smith who is a finance professor at New York University. In the early establishment, this company engaged the trade of cotton and other commodities, which have generous profits. The nature of business was family firm, and the scale was relatively small, and its goal of financial management was profit maximization. In 1906, the company was transformed from a trafficker to an issuing house. In the following two decades, Lehman Brothers provided assistance to almost hundreds of new companies to list, such as F.W. Woolworth Company、May Department Stores Company、Gimbel Brothers,Inc.、R.H. Macy & Company、The Studebaker Corporation、the B.F. Goodrich Co. and Endicott Johnson Corporation. Lehman Brothers transformed from a boutique which operated dry cleaning and small pieces of storage to a financial investment company, at the same time, the nature of the company has gradually changed from a authentic family business to a listed company which gains a wide reputation in the USA and even all the world. Due to the change of the nature of the company, its goal of financial management has shifted from maximization profits to shareholder wealth maximization.
The goal of financial management--shareholder wealth maximization
There are some reasons that leaded this change. The first is because that the USA is a country with mature market economy, and perfect market economy system and capital market system have been built. Therefore, using shareholder wealth maximization as a goal of financial
Lehman Brothers Inc. is a comprehensive and diversified investment bank, which services the financial needs for global companies, institutions, governments and investors (RYBACK.W). Since Lehman Brothers was established in Montgomery in Alabama in 1850, it has experienced the American Civil War, two world wars, the Great Depression,‘9‧11 'attack Strike and an acquisition. However, it still survive, and it was called as ‘19 Mania cat’ by Roy Smith who is a finance professor at New York University. In the early establishment, this company engaged the trade of cotton and other commodities, which have generous profits. The nature of business was family firm, and the scale was relatively small, and its goal of financial management was profit maximization. In 1906, the company was transformed from a trafficker to an issuing house. In the following two decades, Lehman Brothers provided assistance to almost hundreds of new companies to list, such as F.W. Woolworth Company、May Department Stores Company、Gimbel Brothers,Inc.、R.H. Macy & Company、The Studebaker Corporation、the B.F. Goodrich Co. and Endicott Johnson Corporation. Lehman Brothers transformed from a boutique which operated dry cleaning and small pieces of storage to a financial investment company, at the same time, the nature of the company has gradually changed from a authentic family business to a listed company which gains a wide reputation in the USA and even all the world. Due to the change of the nature of the company, its goal of financial management has shifted from maximization profits to shareholder wealth maximization.
The goal of financial management--shareholder wealth maximization
There are some reasons that leaded this change. The first is because that the USA is a country with mature market economy, and perfect market economy system and capital market system have been built. Therefore, using shareholder wealth maximization as a goal of financial