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Essay / Research Paper Abstract
This 6 page paper considers the impact that scandals such as Enron and WorldCom and the effect that they had on the stock markets. The paper argues that the impact was not as great as generally argued that the evidence shows the markets were already in decline. This supports the idea that the markets are not inefficient as was assumed in the days and weeks following these collapses. The paper includes 1 graph. The bibliography cites 9 sources.
Page Count:
6 pages (~225 words per page)
File: TS14_TEstkfal.rtf
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Unformatted sample text from the term paper:
all is going well it has been argued that past performance may indicate future performance and there is a general acceptance that markets may perform in line with the weak
model of the efficient market hypothesis (EMH). It maybe argued that this lead to the irrational exuberance of the stock markets in the 1990s and the resulting pressure on companies
to continue to perform to the same degree. The problem arises when growth is too fast and stock markets fall. For this reason it may be too simple to
blame many of the recent stock market declines on the accounting scandals such as Enron and WorldCom. There is a large plethora of evidence that the collapse of these companies
impacted on he stock markets. The way that the scandals occurred could not fail to impact on the confidence the investors had on the controls the regulations that are meant
to control companies that are quoted on the stock exchange. The argument is that there was a massive drop in the share prices due to the way in which
there is a great deal of trust placed in the system. The price of a share is determined by supply and demand. This demand is impacted by information regarding that
share as well as market conditions. In the case of Enron and WorldCom the were serious concerns over the way in which auditors had failed to notice very simple errors
in the accounts, so serous that they lead to bankruptcy. If we look briefly at these two important cases, and remember the fact that this was in the wake of
the Tyco announcement and it becomes apparent why the markets become more jittery. There is one thing that all commentators agree on; the
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