Reasons behind the Financial Crisis Essay Example | Topics and Well Written Essays - 750 words

Reasons behind the Financial Crisis - Essay ExampleStill on torts, theater directors suffer be held liable due to their subordinates both beneficial and non-beneficial. The pecuniary crisis is fostered by inept decision making poor planning and general laxity in troubleshooting. These problems accrue from middle management personnel, but a director is liable (Berlatsky 3). Directors can be held liable for breaching fiduciary duty to the corporations they run. This situation arises when a director tries to avoid conflict of interest such that, through their actions or omissions, they are doing an injustice to the corporation. An example is when directors knowingly enter into contracts that are financially inappropriate for their companies. The directors becharm their personal interests in the contract to be of greater value. Most directors have a tendency to act outside their authority in regard to garner patent and other corporate governing documents. Such decisions result in mi sappropriation of company resources, poor investment decisions and an inevitable financial crisis (Berlatsky 34). Directors are overly liable for Risk Management in regard to the investments made by the company. However, this liability extends even more to the Gate keepers. Gatekeepers include lawyers, accountants and investment bankers. This group of professionals plays a significant role in advising the directors on what ventures they should and should not undertake. The first group is the accountants. An accountants failure to comprehensively account for the acquisition and use of financial assets, therefore, is equal to the failure of the company. Investment bankers should transparently render their advice on which ventures are more profitable than the others. Most investment bankers lack transparency owing to their self-importance serving motives this led to increased debt burden or over-leveraging. Another crucial batch of professionals is the lawyers. Their work should be to ascertain the legal financial implications made by a director and in extent the company they represent. These professions collectively failed to render their services effectively and with efficiency. They excessively did not uphold integrity especially in regard to safeguarding company assets. Finally, they did not comply with the law especially in light of contract procurement (Hamdani & Olin 56). The most eminent failure of internal and orthogonal auditors is fraud. Auditors are the main whistle blowers in regards to a corporations failure and success despite how minimal. In the event that they turn a craft eye to illegal, inappropriate activities of a company in managing and investing finances the result will be a financial crisis (Hamdani & Olin 78). Notable failures of denotation rate agencies are apparent in the following three areas Ratings methodologies in this case, most of the credit rating agencies did not follow the recommended rating methodologies. There are also reports of the ratings leaking to interested parties before publish which is surmountable to fraud. This unfair rating systems contributed to the great number of poor financial decisions made that led to the financial crisis. Fiduciary legislating managing conflicts of interest the agencies do not have clear cut policies to manage cases of conflict of interest. This is especially notable in instances where the issuer holds large shares in the firm. Timely, accurate disclosures credit rating agencies are slow to disclose errors and fix them especially in reg