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- Creators: Prokofiev, Sergey, 1891-1953
Description
The United States has experienced a financial crisis every ten years for the past three decades. Investors, financial institutions, and government officials fear these moments because of how negative the experience is and the strain it puts on the nation’s financial markets. Analyzing the financial crises of 1987, 1997 and 2008 shows what is to blame for the chaotic times that happened. In all these instances, human actions set up the occurrences that allowed a crash to take place. Each crash is different in their own respect; however, greed, procrastination and a herd mentality are the biggest reappearing trends in each ten-year cycle. Human nature helped escalate each of these crises as well, making them worse than they might have been.
It is important to know why financial crises happen every ten years since the United States is approaching what could be the next ten-year cycle. However, 2019 could be the year the financial markets escape past trends, but that will not happen without understanding why past crises have taken place. If humans stop creating the occurrences for a crisis, there will be nothing for human nature to escalate and make worse. The more independence and knowledge investors and financial institutions have, the easier it will be to stop the occurrences that create a crisis every ten years. This thesis explores why human actions are really to blame for the financial crises the United States’ markets have experienced, and why human nature is to blame for escalating the crisis experienced. Moving forward, if humans can stop creating the occurrences for a financial crisis, the markets can be changed for the better.
It is important to know why financial crises happen every ten years since the United States is approaching what could be the next ten-year cycle. However, 2019 could be the year the financial markets escape past trends, but that will not happen without understanding why past crises have taken place. If humans stop creating the occurrences for a crisis, there will be nothing for human nature to escalate and make worse. The more independence and knowledge investors and financial institutions have, the easier it will be to stop the occurrences that create a crisis every ten years. This thesis explores why human actions are really to blame for the financial crises the United States’ markets have experienced, and why human nature is to blame for escalating the crisis experienced. Moving forward, if humans can stop creating the occurrences for a financial crisis, the markets can be changed for the better.
ContributorsPoore, Savannah Shea (Author) / Licon, Lawrence (Thesis director) / Budolfson, Arthur (Committee member) / Department of Information Systems (Contributor) / Department of Finance (Contributor) / Barrett, The Honors College (Contributor)
Created2019-05
Description
Financial distress and restructuring is a core component of the corporate finance advisor's arsenal and is needed in nearly all market conditions, whether recessionary or expansionary. Financial distress means that a company is in present or future danger of not being able to pay its financial obligations. There are many market indicators of distress which may include: debt trading significantly below face value, stock price trading at or below $1 per share, and implied negative shareholders' equity on the balance sheet. In order to remedy financial distress, the debtor and its creditors seek to hire investment banks specializing in financial restructuring to help fix the debtors's capital structure and possibly navigate through a bankruptcy process. Stephen Moyer describes financial restructuring as "the process of transforming a firm's capital structure to better fit the current and/or future circumstances of the firm" (53). The way that this is accomplished is reducing the debtor's liabilities in order to accurately reflect asset value. Liabilities may be adjusted in out-of-court restructuring agreements or in-court bankruptcy restructurings. The former is often quite difficult considering the hostile nature of the situation and competing interests but is preferred if possible. The latter is most common but also usually both lengthy and expensive. In most cases, the liabilities will be exchanged for new liabilities or equity, providing the creditors with some form of recovery, and leaving the debtor in a healthier position post-emergence. In order to put myself into the shoes of a financial restructuring advisor, I conducted a technical case study on Eastman-Kodak by recreating a financial model depicting possible returns to creditors and emergence from bankruptcy. This model is depicted within the thesis.
ContributorsEghlimi, Sean Cameron (Author) / Licon, Lawrence (Thesis director) / Orpurt, Steven (Committee member) / School of International Letters and Cultures (Contributor) / Department of Finance (Contributor) / Barrett, The Honors College (Contributor)
Created2018-12
ContributorsProkofiev, Sergey, 1891-1953 (Composer)
ContributorsProkofiev, Sergey, 1891-1953 (Composer)
ContributorsProkofiev, Sergey, 1891-1953 (Composer)
ContributorsProkofiev, Sergey, 1891-1953 (Composer)
ContributorsProkofiev, Sergey, 1891-1953 (Composer)
ContributorsProkofiev, Sergey, 1891-1953 (Composer)
ContributorsProkofiev, Sergey, 1891-1953 (Composer)
ContributorsProkofiev, Sergey, 1891-1953 (Composer)