The proposal’s broad-area-of-study is financial performance within Management accounting and strategy. The notion will examine the association/relationship among the works of intellectual-capital (structural-capital and human-capital) and financial and non-financial performance in financial service industry (intermediary) in developed-country within foreign branch/foreign establishment in international/multinational companies. The motivation behind this research is recognizing core elements/ variables to control/restrict/limit (for future organization) thus are most responsible to transfer crunch/ bankruptcy cause leapt of great depression/ recession to sustain and retain the advent of globalization. The roots of research are global financial crisis 2007 and 2008, has passed through various stages exposed pervasive weaknesses in global financial system and regulatory frame work in financial service industry which created negative impact/image of globalization and international /multinational financial companies among public and within firms/country’ boundary. The specific/narrow focus of research is to choose one (single business such as mortgage loan or treasury) of bankrupt international /multinational financial firm (such as Lehman Brothers, Fannie Mae and Freddie Mac and many more*) to analyze. Additionally the study’s contribution to extract literature to resist, control and limit expansion/ further financial disaster for developed and developing countries in term of maintaining respected economy of country.
The aim of study is to explore and examine of intellectual capital and performance quality/measurement “such as financial and non-financial” in bankrupt financial service company (i.e Lehman) though they seek out a reliable relationship in business performance, that tend to expose the pervasive weakness in this financial system and regulatory frame work. Additionally find how to rescue strong foreign branches from catastrophe to limit financial crisis with country’s boundary to prolong and save the allure/benefits of globalization for to maintain confidence of future potential investor and financial corporations.
Was the Lehman’ strategy effective to carry business? If so, what was the blunder/ritual they made/feel by intellectual capital to gain more profit? Was a Lehman Brothers evaluating its intellectual capital? If so, how can they do it? Was there flaw to continue? If not, can a model for evaluating intellectual capital be developed? Was there an optimal mix of intellectual capital components? Were they evaluating their financial performance? If so, how? What factors contribute to performance? Is there relationship between the components of intellectual capital and financial performance in Lehmen Brothers? How might the current methods of measuring intellectual capital and business performance be improved? Does culture impact on measuring intellectual capital and management? Can we limit the financial crisis within country’s boundary to rescue foreign branch/establishment? If so, what are variable to restrict to limit crisis?
Some of the formal/Official economic data presented that extensive number of nations bearing recession as of early 2009. First of all US had suffered recession at the end of 2007, and 2008 and many other nations swallow the effect.
In the United States recession notably throw by housing market correction (a potential effect of United States housing bubble) and subprime mortgage crisis. According to 2008/2009 recession is considering personal spending fall for the first time in last 20 years. It specifies the intensity and harshness of the current recession as shown lower consumer confidence and recovery acquire in long period of time. U.S. population has been tough knock by the current recession because of two reasons 01. Value of houses was falling and 02. Personal pension-savings devastate on the financial market. The individuals were helpless gazed at their wealth being furrowed along with scare of losing jobs as marked by rise in unemployment rate. In the U.S. February 2008, 63,000 jobs discarded in five years. On April 6, 2008 Alan Greenspan, Ex-chairman of Federal Reserve indicated 50% probability of US suffer recession. Furthermore The Bureau of Economic Analysis also accounted more 156,000 jobs had been vanished in September.
On April 29, 2008, Moody’s acclaimed that nine US states are in recession. In November 2008 company eradicate 533,000 jobs, the largest single month hammering in 34 years. As to accumulate the loss for 2008, a projected 2.6 million U.S. jobs were abolished. In March 2009 the unemployment rate of US rise to 8.5 percent, and 5.1 million people become job less since the recession commenced in December 2007. Some analysts acknowledged that due to a prolonged credit crisis and “wild inflation in supplies such as oil, food and steel”, the United States was however in a recession. Also showed 6.4% cry off decline in spending all through Q3 on non-durable commodities, i.e. garments and foodstuff, this is biggest hit since 1950. The United Stated had been suffering from a recession (once economy boomed), depend on a number of economic indicators such as job sufferers, sharp turn down in personal income, and drop in real GDP. With the formal acclamation of The National Bureau of Economic Research and Most of economists assumed that the recession have ended. But they had not made this official determination until July 2003 that the NBER publicize its official determination.
The United States financial crisis has resounded around the globe. The crisis not only weakened the US national economy but also spoiling around the world i.e fall of stock price can been observed globally. The various media highlighted effects over other countries economy i.e New Delhi news pointed towards the effect over India, China, and Russia. The newsweek.com making US responsible for China, Mexico, France, Britain, South Korea, Germany, Beijing and Japan. In Australia, share holders and superannuation funds have suffered significant losses. Many ordinary Australians will be forced to bear the brunt of the US crisis via diminished retirement income and being forced to work beyond their planned retirement age. An other Literature referring ten countries suffering by United States financial crisis: including China, Brazil; Latin American, Romania, Thailand, North Korea, Iran, Malaysia, Morocco and The United Arab Emirates for various reasons but all they one thing common is connectivity of Business and business market.
The fall down of the Lehman Brothers is one of the most unpredictable and adverse consequences of the global financial crisis. When on 15 September 2008, the company submitted for relief under Bankruptcy Code (Chapter 11). The journey of 158 years comes to end, started from Two cotton brokers in Montgomery, Ala established the bank in 1850, then steadily developed and after civil war Lehman bank’s headquarters shifted to New York City with a new name Lehman Brothers Holdings Inc. and gripe over the globe facilitating regional headquarters mainly in Tokyo and London. In the life of 158 years, the Lehman Holdings Inc. provided quality services in financial market in different sectors investment, private banking, equity, research, fixed-income sales, management and private equity. It was the fourth largest US investment bank with a record of over 158 years and a perennial credit rating of A or above. Every body shocked when they heard such news “a bank of these standings collapsed overnight”, taking with it the loss of the market liquidity. On September 15, 2008 Lehman Brothers Holdings, Inc. including Lehman Holdings and its subsidiaries commence Chapter 11 bankruptcy at US Court of Southern District New York with the loss of roughly $768 billion and assets worth around $639 billion, become biggest bankruptcy in US history. The unexpected fall down of the Lehman Brothers has originated not only suffering among local and global investors, but also created extensive anxiety in the general public particularly regarding confidence over financial investments and its aggravates the public how to anticipated length of life regarding future investments.
Sixteen Distributing Banks of Lehman Brothers Minibonds announce that they are offering investors a scheme for the repurchase of Minibonds. The bankruptcy of Lehman wounded its foreign subsidiaries such as UK’s subsidiary with the PricewaterhouseCoopers, Lehman Brothers International (Europe), Lehman Holdings’ principal European broker-dealer. Moreover, two Japanese subsidiaries of Lehman Holdings submitted bankruptcy in District Court of Tokyo for ¥4 trillion ($38 billion) in mutual liabilities, this is considered as the country’s second-largest crumple since World War II. For that reason the Tokyo Stock Exchange and Japan’s Financial Services Agency have ordered Lehman to postpone its Japanese operations and the firm will only be allowed to deal to accomplish existing contracts and to convalesce client assets. Further, Lehman has ended to trade on the Hong Kong Securities Exchange and the Hong Kong Futures Exchange until further notice. It is also created a tragedy in UK Lehman employees about 5000 were jobless. Such conditions created throbbing and impious ambiance for public in terms of creating anxiety, unemployment, inflation that can cause obstacle in way of life.
The literature can be identified a variety of research methodologies that are used (interview, questionnaire, survey of annual reports, focus groups) to evaluate intellectual capital. Interviews and questionnaires were often used to supplement each other. Given this background I projected to use a triangulated approach drawing on qualitative and quantitative research methods. The ultimate objective could be a qualitative score or index that can be manipulated, however the process of building the index would require that components of intellectual capital be measured and valued and this is often a highly subjective exercise requiring input from several diverse perspectives. The steps that would be taken would include a series of qualitative interviews to identify the components of intellectual capital that are applicable to financial firm. Using the information provided from the interviews together with indicators develop a set of constructs that would be incorporated into a questionnaire using a point scale. This questionnaire that would be used to evaluate intellectual capital would consist of statements that intend to operationally and reflect the constructs mentioned.
In addition, these statements would be weighted according to their importance and relevance for optimizing the value creating activities in the financial corporations. This questionnaire would be piloted, refined and administered. The data would be recoded to reflect scores and indices using some form of weighting according to their relative importance. The proposed indices would be presented to a range of stakeholders for comments and refinement. Data from the Lehman Brothers on organizational performance both financial and operational would be collected. The data on performance measures would be cross-referenced to data from a number of financial agencies for establishing benchmarks. Also, data collected from a strong/healthy foreign branch/establishment to find out indifferent structural framework, policy if they do carried to way-out to rescue future occurrence. Purpose of Study is qualitative and quantitative falling in both categories exploratory and descriptive study because some issue like intellectual-capital-relationship in financial firms has no available information on how similar problems or research issue had been solved in the past? and also descriptive nature because of quantitative data measurement i.e. financial-business-performance.
Type of Investigation this is co-relational study because multiple factors that influence one and other the problem in a chainlike fashion. Therefore it is require identifying crucial factors, which are associated with the problem. Study Setting as described above the study is co-relational therefore study can be done in natural environment where the works precede normally as field study so this is non-contrived setting. The concern is that our unit of analysis is no more exist and had bankrupt. Unit of analysis refer to the level of aggregation of the data collected during the subsequent data analysis stage. The research main unit of analysis is organization (such as to examine organizational performance as a whole), Secondly the individual (to analyze intellectual capital) and minor the group & the division (to cope with cultural and foreign branches/establishment). Time Horizon of our research is can be cross-sectional in determining performance perspectives, and longitudinal in subject of studying people behavior.
The contribution that this research should make to extract literature to resist, control and limit expansion/ further financial disaster for developed and developing countries in term of maintaining respected economy of their country and way-out to rescue strong foreign branches from catastrophe to limit financial crisis with country’s boundary to prolong and save the allure/benefits of globalization for to maintain confidence of future potential investor and financial corporations. Additionally, this research finding should also assist them in their recruiting of personnel, acquisition of fixed assets and deployment of other resources to ensure that they are competitive and ensure secure ways to do business. This research should also contribute to the extant literature by providing a model for evaluating intellectual capital in the financial industry as well as on the appropriate mix of people, technology and physical assets in the organisation.
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