FEATURE PAPER

The Lehman Brother's Bankruptcy: A Test Of Market Efficiency

The following paper was written by Christine Pichardo and Frank Baconfrom Longwood University. It was presented at the 2009 Allied Academies International Conference.

Abstract

This study tests the market efficiency theory by examining the effect of the Lehman Brothers bankruptcy on several brokerage firms, as well as the overall market. It would suggest that these brokerage firms would occur negative stock prices following the announcement of the Lehman Bankruptcy. For this study, I analyzed 15 firms' stock price's risk adjusted rate of return before and after September 15, 2008, some with larger assets in Lehman than others. Results show stock prices dropping approximately 24 days prior to the announcement and continuing to drop for several weeks. This supports the semi-strong market theory; which suggest that the market anticipated the collapse of Lehman.

Introduction

When Lehman Brothers collapsed, they had about $60 billion in toxic bad debts, and had assets of $639 billion against debts of $613 billion; making it the largest investment bank to collapse since the 1990's. With a bankruptcy of this capacity, you would expect the stock market to take some sort of hit. This study examines the market's reaction to this event by analyzing the risk adjusted return of selected brokerage firms' stock prices around the event date of September 15, 2008.

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TIP OF THE WEEK

Changing Organizational Cultures

Organizational cultures exist on three levels. On the first, or surface, level are the elements of an organization's culture that can be seen and observed, such as symbolic artifacts (e.g., dress codes and office layouts) and workers' and managers' behaviors. Next, just below the surface, are the values and beliefs expressed by people in the company. You can't see these values and beliefs, but they become clear if you carefully listen to what people say and observe how decisions are made or explained. Finally, unconsciously held assumptions and beliefs about the company are buried deep below the surface. These are the unwritten views and rules that are so strongly held and so widely shared that they are rarely discussed or even thought about unless someone attempts to change them or unknowingly violates them. Changing such assumptions and beliefs can be very difficult. Instead, managers should focus on the parts of the organizational culture they can control. These include observable surface-level items, such as workers' behaviors and symbolic artifacts, and expressed values and beliefs, which can be influenced through employee selection. Let's see how these can be used to change organizational cultures.

One way of changing a corporate culture is to use behavioral addition or behavioral substitution to establish new patterns of behavior among managers and employees. Behavioral addition s the process of having managers and employees perform a new behavior, while behavioral substitution is having managers and employees perform a new behavior in place of another behavior. The key in both instances is to choose behaviors that are central to and symbolic of the old culture you're changing and the new culture you want to create. When Mike Ullman became the CEO of JCPenney, he thought the company's culture was stuck in the 19h century (when the company was started). Employees called each other "Mr." and "Mrs.," casual attire was unacceptable even on Fridays, and any elaborate decoration of office cubicles was reported to a team of office police charged with enforcing corporate décor guidelines. Ullman quickly determined that the company's stringent code of conduct was, among other things, keeping it from recruiting the talent it needed. Mike Theilmann, the human resources officer, drafted a list of what he called "quick hits," small changes that would have a big impact on the culture. The first of Theilmann's initiatives was a campaign titled "Just Call Me Mike," which he hoped would cure employees of the entrenched practice of calling executives and managers "Mr. " and "Mrs." Three JCPenney officers are named Mike, along with nearly 400 other employees at headquarters. Theilmann created posters containing photos of the three executive Mikes along with a list of all the advantages of being on a first-name basis. Top of the list? "First names create a friendly place to shop and work."

ANNOUNCEMENTS

AACSB Annual Accreditation Conference

You are invited to submit your manuscripts, works in progress, or abstracts for presentation at the 2010 Academic and Business Research Institute Conference in Orlando. The event will take place September 23-25, 2010. The deadline for submissions is August 31, 2010. For More Information,Click Here

AACSB Annual Accreditation Conference

Make room on your calenders for the Annual Accreditation Conference. The conference will take place in Houston, Texas September 26-28, 2010. This conference is for deans, associate deans, department chairs, and faculty. Register by August 15, 2010 and save 200 USD off the on-site registration fee. For More Information,Click Here

ASC 21st Annual Conference

Please join the American Society for Competitiveness October 28-30, 2010 for their 21st Annual Conference in the Washington, D.C. area. This conference provides an excellent opportunity to interact with scholars, business leaders, and government leaders from all over the world, discuss research findings and current practices pertaining to the various facets and sources of competitiveness to survive and succeed in today's global marketplace, present your paper in a very congenial and professional conference environment, and publish your article in peer-reviewed Cabell's journals. For More Information,Click Here

ICSB 2010 World Conference

ICSB invites you to join them in beautiful Cincinnati, OH, USA for the ICSB 2010 World Conference. The ICSB World Conference is a unique and special gathering place for ICSB's international community to share knowledge and network across borders. Over the last 55 years, the ability to develop both personal and professional contacts from other countries and across cultures has given ICSB members an advantage in the global marketplace. For More Information,Click Here

NCIIA 15th Annual Conference

We invite you to attend the NCIIA 15th Annual Conference in Washington, D.C. March 24-26, 2011. NCIIA's Open is the premier conference for faculty and students involved in technology innovation and entrepreneurship in higher education. Explore the science, business and practice of catalyzing innovation in higher education. You'll have the opportunity to be part of the foremost community of thought leaders in these fields, take away tangible learnings from workshops taught by leading faculty innovators, make connections that will advance your work, see breakthrough technologies at our annual showcase of student innovations at the Smithsonian National Museum of American History, and experience Washington, D.C.. For More Information,Click Here

2011 Small Business Institute® Annual Conference

The Small Business Institute invites you to attend their 2011 annual conference which will be held in Bonita Springs, Florida. The conference will take place February 17-19, 2011. The deadline for paper submissions is September 17, 2011. Conference tracks include accounting and finance, ethics and environmental responsibility, experiential learning, family business, global entrepreneurship, marketing social entrepreneurship, small business, and women & minority business. For More Information,Click Here

2010 ASBE Call for Papers

The Association for Small Business and Entrepreneurship (ASBE) invites you to submit competitive papers, cases, and workshop proposals for our Fall Conference at the Stockyards Hotel located in the National Historic District in Fort Worth, Texas. The conference will take place October 6-8, 2010. The deadline for submissions is August 1st, 2010. For More Information,Click Here

SBI Journal - Request for Papers And Reviewers

The Small Business Institute is now requesting papers and reviewers for the fifth volume of the Small Business Institute Journal. If you are interested in submitting a paper please visithttp://www.sbaer.uca.edu/sbij/about.phpto see the guidelines and submission procedure. If you are interested in becoming a reviewer or would like more information please email us atsbij@uca.edu.

International Enterprise Promotion Convention: Call For Speakers 2010

Do you see Enterprise as a transformational force for people and communities? Do you support Enterprise Promotion, as a practitioner, funder or policymaker? Are you proud of your own achievements? Do you want to share your successes? Would you like to learn from the experience of colleagues around the World? If you can answer YES to even one of these questions, you should come and speak at IEPC 2010, in Harrogate, North Yorkshire from 8-10 November 2010.. For More Information,Click Here

International Conference on New Horizons in Education

The main goal of this conference is to present and discuss new trends in education. INTE-2010 conference is supported by many universities and organizations. INTE-2010 has already formed a large, multi-national and friendly community of colleagues who love to share ideas. INTE-2010 invites you to submit proposals for papers, panels, best practices, roundtables, tutorials, posters/demonstrations, and workshops. For More Information,Click Here

Student Case Writing Competition

The Baylor University Entrepreneurship Program and USASBE are jointly sponsoring a student case writing competition in conjunction with USASBE's annual meetings beginning in 2011 at USASBE's 25th Annual Conference to be held January 13-16, 2011 in Hilton Head, South Carolina. This is an innovative international event that supports and encourages undergraduate and graduate students who wish to engage in case research and case writing. Submitted cases are suitable if they advance the field of entrepreneurship, broadly defined, and contribute to an understanding of entrepreneurial phenomena. For more information,Click Here

ICSB 2010: "Entrepreneurship: Bridging Global Boundaries"

The ICSB World Conference 2010 will be taking place June 24-27, 2010. It will be held in Cincinnati, Ohio, USA. The Early Registration Deadline is April 30th, 2010. Topics will deal directly or indirectly with: * Entrepreneurship Education * Individual Entrepreneurship * Women and Minority Entrepreneurship * Small Business and SME's in Developing Economies * Public Policy * Entrepreneurship and Technology * Family Business * Corporate Entrepreneurship * International Entrepreneurship * Entrepreneurship in the Arts * Entrepreneurship Across the Curriculum * Social Entrepreneurship * Additional topics of interest and value to ICSB's membership.
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Main Office Phone: (501) 450-5300

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