Corporate Scandals: How Greed Consumed The American Dream Essay

1951 Words 8 Pages
More and more corporate scandals are happening in America. Why have these scandals just shown up in recent years? What causes these corporations to lie and be deceitful towards investors? Though once seen as legitimate, fair, honest, and respectable, corporations have arrived at a stage of greed and deception. This can be explained by a number of factors such as how the stock market works, the stock market boom, changing company practices, CEO benefits, and specific company examples.
Public companies are any company that has stock available to the public to buy. A company that wishes to set up a new business or expand its existing business can raise the capital it requires either by borrowing money or by issuing shares to investors. The
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The Chief Executive Officer is the senior manager who is responsible for overseeing the activities of an entire company. The CEO usually also holds a position on the board of directors, or also holds the title of president. All CEO's of publicly traded companies have a base salary of at least one million dollars. Plus they receive bonuses for their performance each year. A CEO flourishes when the company is doing well and should take a hit when the company is going down hill. These CEO's hold a large portion of the stock and that is why we have started seeing corporate scandals come about after the market has gone down. Employees of these companies receive stock options that are either put toward their retirement plan or taken from their salary (Swedberg). Corporate scandals have started to occur because of public companies and their greed for more capital by deceit and conflicts of interest.
In the early 1990's, the stock market started to pick up and increase at unseen rates. Everyone and their brother saw this and wanted a piece of the easy money. People were investing and in the mid 90's, the New York Stock Exchange was growing at an unseen pace. Publicly traded companies were increasing their capital by almost one fourth of their whole income per year. Public companies and of course their CEO's were receiving more free money than they knew what to do with. This boom was to set up one of the worst bust's of the stock market in our generation, though…