Problems in modern stock

markets
Updated 25th January 2019
 Examples of stock market problems
• Unstable markets with high volatility.
• Enron style creative accounting, Tesco plc too.
• e-business boom & bust, 1998 – 2000.
• Global financial crisis 2008 – 2010.
• Speculative trading within Banks.
• Poor lending decisions within banks.
• Costs & effectiveness of regulation.
• Lack of supervision in junior markets.
• Losses in UK AIM companies, see FT article.
 More Problems
• Directors remuneration (bonuses) too high.
• Bankers bonuses.
• Takeovers & mergers not logical.
• ‘Public interest’ aspects of takeover.
• Insider dealing.
• Shareholders do not vote at AGM.
 More on Accounting problems
• Creative accounting .
• Auditors not independent.
• High level of audit fees.
• Less ‘traditional’ accounting, conservative
accounting rather than ‘fair market value’.
• Only four audit firms (oligopoly).