Every organization wants to expand its business. The resource that fuels expansion of any organization is capital. There are many ways to generate capital. Normally companies go public to meet their demands of huge capital. When a company goes public for the first time, then it is called Initial Public Offer (IPO). There is a lot of exercise that goes into allocation of shares among individual investors, promoters etc. In order for the stock to be traded, it has to be listed with a stock exchange. In case of India it is either Bombay Stock Exchange (BSE) or National Stock Exchange (NSE). After it is listed, the stock price varies with the performance of Company. Financial results released by companies at regular intervals is a good indicator of performance of a company. Wall Street closely watches the balance sheets of the publicly traded companies because it is bothered about the heavy betting it takes on a companies stock. As a result companies become too conscious of Wall Street. Meeting the market expectations is good thing to cheer and a good way of repaying the investors who reposed their faith in the company. In some cases where companies give more importance to this goal, they hide the stock de-valuing factors. They fabricate the books and present a normal picture. This tampering with numbers will only give temporary relief to organization , but has a huge negative implication which will roll out eventually. Examples of Enron, America Insurance Group are good examples of this.
Is wall Street the Culprit for the mistakes committed by organizations?
