Finance Blog

Does fraud come hand in hand with power? The final contemporary finance issue that we were taught in the international finance and responsible finance management module was financial ethics. In this blog I am going to investigate this financial issue and relate what I have learnt to some real-life instances of such ethical issues such as fraud. “Fraud encompasses an array of irregularities and illegal acts characterized by international deception. It can be perpetrated for the benefit of or to the detriment of the organization and by persons outside as well as inside the organisation”   (O'Gara, 2004) . A typical organization loses about 5 percent of its revenue to fraud each year, according to a 2012 report by the Association of Certified Denver Business Journal Strategies: How to detect and prevent workplace fraud (Albrecht, 1982) . Research has shown that financial enticements within an organisation can tempt individuals to commit ethically questionable and fraudul...

How useful is a bank without money? For this week’s blog I am going to be reflecting on the multimedia financial documentary RBS: Inside the bank that ran out of money. RBS (Royal Bank of Scotland) was founded in Edinburgh in 1727. It went on to become one of the biggest banks in the whole of Scotland (RBS, 2019) .  Royal Bank of Scotland then went on to acquire many other banking organisations to grow their company, one of the most well-known names in the UK being Natwest. What started of as a medium sized successful banking organisation slowly started to grow into the large corporation we know today, but the journey was not easy and all was around 2 hours away from going completely bankrupt on the 13 th of October 2008 (The Telegraph, 2011) . As over 10 years has passed since the bailout of RBS from the UK government, does not mean that this event has been forgotten. All issues seemed to begin when RBS gained a new chief executive Fred Goodwin.  Goodwin was ...

Pizza Express is on the chopping board to be sliced up. Pizza Express has been rolling dough since 1965 when they opened their first restaurant in Soho. The company are known for their distinctive original recipes that they’ve used for their pizzas since opening, however they are now in talks for a company debt reconstruction plan.  The reconstruction will result in the bondholders of Pizza Express being in line for a large slice of the company hopefully with extra toppings. Bonds can be defined as “medium or long-term bearer-from debt security, that commits the issuer to a specific repayment date and to interest pavements at a fixed or variable rate”  (Watson, 2010) . Pizza Express is one of the UK’s most well-known Italian restaurants and has 436 UK stores (BBC News, 2014) , but this does not mean that the overall organisation has not faced any struggles over the years. The current bondholders of Pizza Express have not been happy with the way the company has been ...

An inside job explained, what really went on in the worlds most influential organisations? From watching the financial film Inside Job released in 2010 my eyes were opened to many issues that i was unaware of. It left me feeling that can we ever trust any information is given to us from influential members of organisations. The film outlined the many issues that occurred in the 2008 global recession in a wave of events resulting from the incompetence of the worlds largest investment banks and insurance companies. During the time of the great recession there was a global economic downturn that devastated the worlds financial markets along with the real-estate industry  (HISTORY.COM EDITORS, 2017). The effects from the great recession meant that there was a huge increase in house foreclosures worldwide, resulting in million of people losing their homes and life savings.  In fact, according to real estate data company "RealtyTrac", ...

Trade off theories vs Modigliani and Miller. Using trade off theories within an organisation can bring many benefits to a company. The Trade off theory of capital structure can be defined as  “ The taxation of corporate profits and the existence of bankruptcy penalties are market imperfections that are central to a positive theory of the effect of leverage on the firm's market value.” (Kraus, 1973). However some could argue that using the methods of Modigliani and Miller are more relevant to modern day organisations.The  Modigliani and Miller   theory believes that a company’s WACC remains unchanged at all levels of gearing  (Watson & Head, 2016) There are three different methods a firm can use when financing a business  according to  Modigliani and Mille r , they can borrow money, spend the profits that they have saved and use the insurance of shares. In its simplest form is based on the idea that with certain assumptions in place, there is ...