Major factors contributed to Lehman Brothers failure

From 2006 to 2007, Lehman Brothers were the leading investment bank in the United States. However, by September 2008, the Company’s stock price fall by 73% of its value. It also lost $3. 9 billion while trying to dispose of its shares in its subsidiaries. After research, it was revealed that the cause of this downfall was contributed by unethical management practices, dubious accounting practices, huge investments in unsecured markets and laxity by some regulators. This led to manipulation of reports in order to attract investors. Liquidity problems Lehman was unable to meet its short-term obligations despite it having a high asset base (Valukas, 2011). This caused it to lose its market confidence which made many banks to withdraw their credit line services from Lehman brothers. To counter this challenge, the company reduced its gross asset base which stood at $147 billion to $45 billion.