INTRODUCTION OF CAPITAL MARKET & CAPITAL MARKET INSTRUMENTS

INTRODUCTION OF CAPITAL MARKET & CAPITAL MARKET INSTRUMENTS


The financial assets are also called financial claims or financial securities or paper assets. These
financial securities are issued by deficit units in exchange for their savings. It is this reason that
surplus-generating units are called investors while deficit units are called issuers. These investors
and issuers of financial securities constitute two important elements of the securities market.
The third critical element of markets is the intermediaries who act as conduits between the
investors and issuers. Regulatory bodies, which regulate the functioning of the securities markets,
constitute the last but very significant element of securities markets. Thus, there are four
important elements of securities markets namely investors, issuers, intermediaries and regulators.
Now depending upon the nature of the relationship among these elements of securities
markets, the markets are classified as primary and secondary. Further, depending upon the
time, the markets are classified as short term and long term and depending upon the issuers,
these are classified government securities or corporate securities. Government securities are
also called gilt-edged securities. To pick up the right kind of securities, an investor or a portfolio
manager should be fully conversant with the different segments of securities markets, different
types of securities which are traded and different trading arrangement which exist in the
market. In this unit, we shall distinguish between primary market and secondary market securities
and discuss various traded securities and trading arrangements prevalent in India. Let us
begin distinguishing primary and secondary markets.

CAPITAL MARKET & CAPITAL MARKET INSTRUMENTS

CAPITAL MARKET & CAPITAL MARKET INSTRUMENTS


Financial market is a place or a system where financial assets or instruments are created and
exchanged by market participants. Financial markets play a significant role in performing the
resource management in an economy. They help capital creation by acting as a bridge between
the savers and the spenders through various financial instruments like equity, debt or a mix of
both. In the process it facilitates price discovery and providing liquidity for financial assets.
In every economic system, some units which may be individuals or institutions, are surplusgenerating
(savers) while others are deficit units (spenders). Savers can either invest or hold
their savings in liquid cash. Holding liquid cash is required to meet transaction or precautionary
or speculative needs. The surplus-generating units could invest in different forms. They
could invest in physical assets viz. land and building, plant and machinery or in precious
metal viz. gold and silver, or in financial assets viz. shares and debentures, units of the Mutual
Funds, treasury bills, commercial papers, etc.,

ICWAI / ICAI DECEMBER 2012 FOUNDATION, INTER, FINAL EXAM RESULT ONLINE

ICWAI / ICAI DECEMBER 2012 FOUNDATION, INTER, FINAL EXAM RESULTS ONLINE

ICWAI / ICAI DECEMBER 2012 FOUNDATION, INTER, FINAL EXAM RESULTS ONLINE

ICWAI / ICAI DECEMBER 2012 FOUNDATION, INTER, FINAL EXAM RESULTS ONLINE

ICWAI/ICAI INTER DEC 2012 GROUP1 PASS PRESS RELEASE

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000331   000445   000736   000766   001081   001693   001974   002062   002186   002343   002497   003043   
003053   003384   003551   003769   003916   003986   004522   004562   004780   005480   005503   005647   
005790   005834   005958   006066   006120   006668   006875   007017   007140   007150   007190   007348   
007461   008131   008516   008950   009079   009473   009650   009754   009784   010338   010411   010762   
010856   011028   011088   011215   011610   011713   011867   011897   012226   012310   012660   012838   
013508   013578   013691   014050   014278   014351   014371   014539   014736   014923   015041   015081   
015165   015322   015560   015603   015643   015924   016092   016116   016200   016303   016353   017220   
017488   018044   018211   018512   018987   019687   020488   020541   020635   021006   021009   021305   
021355   021696   021770   022159   022470   022503   022523   022583   022740   022770   022998   023076   
023213   023357   023367   023638   023751   023835   023845   023959   023979   024027   024047   024441   
024792   024856   024980   025556   025817   025877   026236   026340   026423   026463   026517   026577   
026888   027000   027494   027839   027992   028080   028729   028731   028733   028735   028776   028820   
028973   029011   029041   029135   029185   029707   029717   029810   030030   030050   030060   030153   
030297   030300   030330   030380   030568   030621   030651   030715   031010   031050   031080   031341   
031973   032105   032175   032406   032416   032623   032757   032810   032880   032974   033831   034304   
034488   034541   034561   034625   034635   034852   034996   035074   035489   036075   036189   036316   
036410   036470   036804   036844   036884   037170   037233   037307   039181   039389   039399   039412   
039526   039576   039600   039610   039703   039827   039847   039897   039920   039980   040006   040263   
040327   040347   040367   040410   040480   040544   040855   041097   041100   041338   041441   041565   
041712   042285   042526   042556   042733   043112   043246   043774   044390   044601   045278   045351   
045662   047477   047590   048197   048458   049355   049409   050022   050116   051581   051645   051812   
052198   052479   052502   052532   053460   053583   053908   054825   054979   055007   055274   055378   
055629   055836   055990   056058   056255   056285   056793   056817   056847   058040   058621   058889   
059258   059475   061568   062953   062983   063416   063436   065250   065334   065581   066158   066178   
066188   066853   067109   067255   067282   067490   068160   068317   068534   068668   068855   068875   
069170   069190   069284   069358   069451   069856   070095   070169   070199   070242   070740   070790   
070998   071180   071263   071307   071490   071524   071594   071721   071865   071875   071909   071919   
071939   071979   072037   072047   072067   072308   072378   072535   072689   073018   073131   073462   
073576   073920   075454   076010   076435   076622   076796   076860   076933   076973   077021   077623   
077777   077820   078220   078708   079003   079334   079511   079882   080279   080603   080693   081477   
081768   081841   082013   082240   082605   082779   082892   083271   083937   084179   084563   085046   
085263   085377   085688   085855   085949   086037   086047   087101   087817   088112   088132   088276   
088330   088403   088517   089193   089227   089568   089601   090205   090743   090773   090877   091079   
091433   091670   091754   092237   092360   092370   092484   092558   092578   092691   093331   093963   
094081   094580   094683   095290   095634   095841   096093   096117   096187   096240   096418   096759   
096986   097074   097148   097211   098159   098336   098460   098513   098617   099410   099524   100026   
100243   100253   100638   100721   100929   101190   101328   101401   101752   101846   101876   102713   
103162   104859   105599   105756   106229   106406   107052   107196   107417   107550   107821   107891   
107965   108167   108354   108418   109512   109592   109823   110975   111220   111675   111729   111906   
112211   112281   113045   113189   113262   114594   114751   114929   114989   115180   115190   115388   
115856   116379   116980   117069   117132   117597   118434   118795   118859   119943   120808   121193   
122682   123001   123135   123342   123486   123623   124200   124240   124500   125063   125220   125531   
125906   126271   126325   126502   126730   127129   127232   127490   127503   128066   128293   128534   
128885   129421   129491   130045   130149   130593   130760   130884   131016   131036   131046   131180   
131223   131628   131989   132575   133309   134089   134112   134152   134236   134310   134547   135454   
135508   136184   136485   136495   136716   137071   137125   137209   137312   137446   137580   137717   
137747   138062   139003   139023   139157   139561   139749   139882   139936   140603   140653   140924   
141082   141126   141290   141393   141540   141684   141985   142127   142675   142709   142759   143064   
143221   143261   143409   143512   143937   143957   144065   144440   144750   145066   145180   145999   
146421   146461   146481   146555   146602   147827   149464   150191   150235   150255   150432   150492   
150546   151443   151517   151650   152153   152217   152755   153371   153599   153716   154643   154860   
156083   156478   156605   156779   157188   157271   157720   157957   158202   158252   158376   158814   
159658   160158   160522   160907   160917   161189   161450   161760   161978   162430   162989   163525   
163876   163910   164028   165059   165216   165547   166681   166745   167000   167445   168031   169230   


 

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169323   169417   170766   170993   171312   171500   171663   171840   172280   172457   172477   172487   
172851   173759   174094   175015   175306   175790   175918   176327   176480   176648   177244   177318   
177441   177762   177806   177826   177910   177950   177970   177980   178058   178111   178131   178191   
178432   178566   178690   179059   179132   179527   179971   180204   181245   181516   181723   181900   
182300   182547   183454   183508   183548   183725   183922   184060   184371   184519   184602   184800   
184860   184933   185125   185406   185466   186072   186126   186788   186871   187033   187083   187093   
187344   187996   188128   188138   188231   188291   188375   188502   188947   189366   189533   189637   
189834   190635   190709   190862   190986   190996   191198   191271   191291   191409   191489   191502   
191582   191780   191833   191873   191967   192035   192085   192202   192282   192366   192450   192480   
192533   192583   192988   193100   193337   194990   195068   195309   195379   195506   195620   196029   
196256   196537   196878   197050   197237   197287   197360   197464   197588   197621   197765   197899   
197932   198104   198218   198311   198425   198445   198599   198682   198756   199001   199031   199185   
199209   199392   199570   199603   199777   200446   200456   200777   200896   200925   201313   201343   
201995   202013   202314   202394   202458   202812   203004   203335   203582   204202   204346   204563   
204657   205223   205490   205594   205658   205805   206067   206264   206575   206980   207181   207235   
207369   207492   207703   208226   208276   208517   210205   210225   210399   210753   211059   211112   
211473   211650   211724   211931   213612   213786   213880   213963   214185   214372   214426   214944   
215240   215520   216956   217178   217592   218109   218242   218533   219223   219648   219979   220074   
220325   220666   220873   221119   221272   221563   221573   221677   222347   222781   223772   224078   
224235   224506   224980   225089   225226   225403   226320   226414   226434   227020   227361   227692   
227923   227983   228590   228890   228964   229146   229250   229487   229644   230060   230174   230529   
230662   230973   231633   232353   232407   232841   232965   233250   233862   234094   234281   234710   
235366   235450   235593   237027   237575   237772   238442   239286   239320   239754   239838   239858   
239868   239901   240294   240575   240752   241783   242714   243020   243183   243247   244455   245603   
245633   245800   246500   246694   247240   247304   249697   249804   249864   250675   251335   251499   
251532   251750   252065   252179   252760   253514   253701   253711   253771   253875   254037   254077   
254120   254461   254689   254762   254960   255191   255817   255900   255920   256142   256991   257340   
257390   257434   257643   257879   258248   258351   258662   260795   260819   261154   261405   261415   
261569   261810   262115   262880   263467   263614   263728   263788   265676   265823   265863   266874   
266988   267100   267387   267397   267895   267939   268120   268254   268431   268471   268565   268575   
268723   269181   269827   269857   269980   270223   270327   270544   270731   270845   271160   271679   
271689   271856   272101   272111   272275   272516   272910   273069   273276   273370   274040   274340   
274434   275455   275549   275736   275913   276239   276767   276850   276934   277467   277497   277841   
278107   278117   278354   278541   279325   279917   279957   280186   281197   281418   281665   281749   
281789   282251   282355   282459   282469   282740   283410   283513   283918   284006   284110   284120   
284337   284470   284761   284949   285110   285160   285224   285441   285461   285515   285752   285866   
285900   286098   286295   286506   286773   286960   287112   287226   287380   287577   287714   287828   
287911   288123   288839   289090   289144   289194   289726   290507   290577   290660   290680   290911   
291060   291310   291390   291611   291735   291755   291902   292776   292830   292890   292993   293249   
293312   293590   293777   293830   294032   294985   296128   296168   296221   296626   297326   297420   
297553   297617   297700   297864   298066   298110   298223   298273   298440   298638   298678   298698   
298895   299338   299619   300170   300180   300398   300555   300816   301412   301670   302704   303631   
303651   303785   304361   304943   305091   305165   305195   305302   305486   305747   307966   308044   
308750   308813   309346   309573   309593   310394   310418   311419   311987   312242   312460   312563   
312667   312874   313046   313076   313213   313628   313825   315610   315733   316019   316774   317143   
317183   317287   317588   317795   317809   317869   318010   318194   318776   318953   318963   319239   
320247   320611   321060   322155   322279   322342   322362   322500   322510   322914   322944   323333   
323467   323560   323925   324137   324280   324561   324695   324892   325439   325469   325532   325666   
325907   326109   326129   326884   327016   327096   327120   327307   327317   327357   327387   327895   
328007   328120   328190   328699   328772   328876   329068   329161   329887   329960   330397   330825   
330835   331471   331699   331826   331920   332078   332171   332807   334819   335030   335050   335080   
335238   335569   335933   336362   336767   336994   338210   339814   340126   340210   340313   340624   
340965   341591   341625   341685   341719   342231   342479   342740   342907   343085   343109   343119   
343149   343159   343189   343212   343667   343750   343894   343908   344150   344160   344190   344273   


 

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344628   344721   344781   345980   346068   346265   346506   347029   347433   347493   347527   347567   
347901   348113   348217   348424   348922   349124   349268   349351   349381   349890   349903   350059   
350102   351350   351528   352485   352716   352820   353115   353299   353332   353590   353994   354353   
355665   355729   355842   356054   356201   356211   356770   357657   357677   357804   357844   357908   
357928   357978   358066   358317   359007   359491   359689   360015   360095   360563   360790   360844   
361253   361594   362234   362318   362535   362846   362866   362980   363098   363285   363586   363670   
364670   365084   365113   365193   365227   365287   365350   365528   366104   366361   366475   366672   
366736   367145   367392   367476   368062   368230   368510   368788   368871   369749   369872   369986   
370031   370292   370663   370707   370777   370984   371092   371313   371333   371664   372304   372615   
372675   372729   373074   373542   373562   373582   373616   373626   373646   373720   374627   374854   
375046   375056   375076   375100   375909   375999   376087   376274   376368   376649   376752   376836   
376856   376940   377319   377389   377399   377586   378507   380225   380265   380319   380690   381009   
381019   381142   382434   382641   382849   382952   383020   383080   384302   385196   385801   385831   
386448   386635   386822   387499   387542   387676   388095   389036   389150   389203   389711   389845   
389855   389959   389969   390813   391025   391252   391396   391770   391804   391864   391968   392150   
392180   392213   392628   392698   392939   392999   393461   394255   394295   395567   397070   397164   
397445   398279   398500   398707   399861   400323   400447   400995   401916   402211   402489   402592   
402666   403326   403356   403410   403854   404490   406068   406349   406630   406680   406900   407089   
407557   407567   407577   407597   407650   407754   407838   407921   407981   408237   408300   408380   
408404   408508   408795   408942   408992   409010   409020   409040   409050   409288   409830   410162   
410182   410433   410620   411287   411297   411320   411370   411414   411528   411538   411598   411611   
411992   412070   412371   413382   413540   413747   413777   413860   414072   414082   414831   415290   
415779   415882   416188   416325   416646   416656   416740   416760   416893   417065   417523   418524   
418959   419639   419742   420159   420316   420637   420844   421273   421337   421430   421554   421564   
421755   421761   421855   421875   422057   422100   422274   422565   422826   422920   422950   423028   
423235   423452   423482   423877   423900   424059   424142   424276   424577   424630   424704   424744   
424818   424921   425143   425153   425183   425267   425390   425508   425538   425725   425775   425809   
425982   426341   426662   426756   426983   427001   427135   427185   427312   427342   427580   428032   
428092   428126   428176   428196   428210   428407   428664   428851   429478   429488   429571   429645   
429996   430006   430021   430031   430105   430352   430663   430747   430777   431052   431220   431634   
432615   432635   433271   433419   433469   433499   433522   433532   433780   434119   434232   434262   
434282   434326   434420   434978   435036   435440   435524   435781   435825   436087   436097   436180   
436294   436368   436565   437038   437215   437399   437452   437546   437630   437650   437743   437887   
437910   437930   438296   438620   438690   438764   438941   439040   439060   439287   439494   439705   
440048   440349   440516   440630   440970   441029   441132   441286   441380   441557   441981   442267   
442508   442651   442962   442972   443090   443435   443549   443602   443642   443682   443716   443860   
443943   444175   444663   444860   445220   445861   446448   446872   447004   447034   447231   447409   
447449   447499   447710   447790   447853   447873   447937   448149   448573   448617   448657   448750   
449006   449056   449100   449110   449213   449648   449865   450044   450198   450251   450365   450419   
450489   450883   451055   451129   451262   451306   451366   451450   451760   451844   451874   451978   
452160   452243   452337   452347   452367   452430   452574   452648   452771   452875   452939   452979   
453007   453609   453659   453762   453792   453866   453886   453910   454329   454867   454930   455029   
455069   455122   455152   455216   455483   456133   456320   457020   457248   457301   457706   458550   
458797   458904   458994   459082   459106   459580   459604   459614   460070   460154   460913   461081   
461209   461229   461302   461800   462136   462290   462437   462551   462552   462684   462801   462811   
462881   462905   463013   463187   463197   463270   463478   463541   463882   464084   464158   464305   
464315   464469   464542   464616   464750   465149   465159   465400   465460   465543   465647   465687   
465804   465814   465968   465998   466283   466420   466919   467067   467421   467525   467826   467866   
467980   468098   468141   468171   468546   468807   468827   468837   468990   469069   469764   469784   
469818   469848   470037   470110   470732   470772   470990   471008   471028   471058   471225   471462   
471650   471807   471970   472009   472099   472112   472132   472152   472931   473020   473257   473912   
474010   474268   474435   474455   475125   475279   475416   475643   475840   475924   476092   476313   
476664   477107   477240   477511   477695   477966   478395   478823   479583   479667   480023   480448   
480498   480521   480531   480561   480665   480719   480729   480749   480789   480832   480872   480986   


 

THE INSTITUTE OF COST ACCOUNTANTS OF INDIA < DECEMBER-2012 EXAMINATION > DATE  21/02/2013  PAGE :- 4
                             ** GROUP I PASS ** < INTER. CURRENT SYLLABUS - 2008 >

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481024   481118   481439   481700   481730   481937   481957   481997   482015   482199   482252   482513   
482523   482677   482740   482918   482998   483100   483293   483307   483317   483534   483628   483701   
483781   483791   483939   483969   483999   484077   484441   484451   484515   484595   484920   484960   
484990   485028   485098   485151   485171   485225   485526   485703   486182   486453   486493   486600   
486610   486620   486794   486921   486961   486971   486981   487030   487070   487494   488114   488652   
489165   489322   489540   489717   489934   489974   489994   490000   490050   490163   490320   490340   
490474   490548   490962   491080   491208   491278   491311   491445   491509   491736   491800   491840   
492115   492145   492342   492456   492570   492590   492860   492924   492984   493082   493136   493280   
493353   493624   493728   493851   493861   493925   494033   494260   494438   494468   494488   494842   
494966   495251   495479   495582   495616   495790   496306   496366   496386   496410   496470   496490   
496523   496760   496874   496918   496928   496968   497781   497825   498067   498180   498585   498712   
498722   498772   498826   498900   499339   499680   499763   499877   499930   500038   500151   500171   
500379   500556   500576   500660   500817   500867   501266   501286   501493   501527   501577   501587   
501734   501744   502143   502153   502247   502267   502404   502464   502681   503060   503301   503589   
503692   503726   504051   504436   504520   504550   504890   504974   505664   505694   505995   506220   
506428   506488   506719   507034   507084   507606   507813   508095   508292   508306   508316   508410   
508480   508720   508760   508834   508864   509293   509307   509337   509357   509574   509628   509638   
509698   509761   509845   509855   509875   509929   510064   510325   510499   510686   510720   510730   
510790   510883   510937   511015   511045   511095   511179   511282   511677   512283   512307   512638   
512688   512721   512959   513037   513130   513401   513491   513609   513910   513920   514141   514255   
514970   515059   515360   515453   515463   515600   515911   516558   516578   516809   516912   517030   
517194   517830   518115   518332   518520   518603   518643   518683   518964   519126   519467   519487   
519684   520000   520080   520164   520485   520509   520632   520736   520973   521061   521115   521229   
521382   521496   521530   521540   521550   521683   521880   521914   521974   522082   522210   523157   
523280   523428   523789   524014   524074   524168   524375   524616   524710   524770   525005   525189   
525356   525440   525460   525470   525730   525760   525834   525894   525998   526100   526150   526213   
527214   527575   527585   527595   527649   528131   528309   528482   528492   528506   528566   528576   
528586   528596   528600   528793   528807   528837   528867   529413   529423   529507   529577   529670   
529818   529921   530037   530110   530244   530595   530836   530886   530896   530980   531121   531191   
531255   531389   531442   531506   531536   531793   531960   532172   532206   532226   532453   532734   
532971   533060   533090   533163   533300   533340   533558   534030   534080   534124   534268   534288   
534311   534321   534529   534579   534662   534776   534860   534880   534913   534933   535001   535031   
535071   535091   535155   535249   535259   535269   535787   535860   535914   535964   536146   536196   
536260   536270   536955   537250   537304   537498   537531   537541   537581   537591   537789   538094   
538221   538700   539129   539199   539212   539292   539326   539573   539677   539750   539978   540003   
540023   540561   540625   540966   540986   541024   541074   541281   541459   541646   541656   541686   
541803   541853   541863   541883   541927   542119   542202   542440   542450   542523   542730   542790   
542824   542844   543327   543440   543658   543771   543845   543885   544037   544204   544398   544555   
544669   544722   544836   544940   545181   545399   545566   545586   545596   545600   545620   ***END***

ICWAI/ICAI DEC 2012 INTER/FINAL RESULTS

ICWAI/ICAI DEC 2012 INTER/FINAL RESULTS

Will be announced today night at 3.00 pm
http://182.71.171.61/result/

Ramakrishna Immadi

ICWAI/ICAI Intermediate & Final Result for December 2012

ICWAI/ICAI Intermediate & Final Result for December 2012 Term of Examination would be available on 21 February, 2013 evening on the following link

http://182.71.171.61/result/

Ramakrishna Immadi

RESULT FOR DECEMBER 2012 FOUNDATION EXAMINATION

RESULT FOR DECEMBER 2012 FOUNDATION EXAMINATION

Write a note on IFRS

Write a note on IFRS

The term IFRS refers to the International Financial Reporting Standards issued by International Accounting Standard Board (IASB). 

It also encompasses the International Accounting Standards (IAS) issued by the International Accounting Standard Committee (IASC). 

Interpretations of IASs and IFRSs are developed by the International Financial Reporting Interpretations Committee (IFRIC). 

IFRIC is the new name for the Standing Interpretations Committee (SIC) approved by the IASC Foundation Trustees. 
IFRS includes these interpretations also

Causes of Corporate Failure:

Causes of Corporate Failure:

(i) Technological causes 
Traditional methods of doing work have been turned upside down by the development of new technology. If within an industry, there is failure to exploit information technology and new production technology, the firms can face serious problems and ultimately fail. By using new technology, cost of production can be reduced and if an organization continues to use the old technology and its competitors start using the new technology; this can be detrimental to that organization. Due to high cost of production, it will have to sell its products at higher prices than its competitors and this will consequently reduced its sales and the organization can serious problems.

This situation was seen in the case of Mittal Steel Company taking over Arcelor Steel Company. Arcelor Steel Company was using its old technology to make steel while Mittal Steel Company was using the new technology and as a result, Mittal Steel Company was able to sell steel at lower price than Arcelor Steel Company due to its low cost of production. Arcelor Steel Company was approaching corporate failure and luckily, Mittal Steel Company
merged with Arcelor Steel Company and became Arcelor Mittal Steel Company, thus preventing Arcelor from failure. 
(ii) Working capital problems Organizations also face liquidity problems when they are in financial distress. Poor liquidity becomes apparent through the changes in the working capital of the organization as they have insufficient funds to manage their daily expenses. Businesses, which rely only on one large customer or a few major customers, can face severe problems and this can be detrimental to the businesses. Losing such a customer can cause big problems and have negative impact on the cash flows of the businesses. Besides, if such a customer becomes bankrupt, the situation can even become worst, as the firms will not be able to recover these debts. 
(iii) Economic Distress A turndown in an economy can lead to corporate failures across a number of businesses. The level of activity will be reduced, thus affecting negatively the performance of firms in several industries. This cannot be avoided by businesses. The recent economic crisis in the USA led to many cases of corporate failures. One of them is the insurance AIG insurance company. It is facing serious problems and it might close its door in the near future. 
(iv) Mismanagement Inadequate internal management control or lack of managerial skills and experience is the cause of the majority of company failures. Some managers may lack strategic capability that is to recognize strengths, weaknesses, opportunities and threats of a given business environment. These managers tend to take poor decisions, which may have bad consequences afterwards. Furthermore, managers of different department may not have the ability to work closely together. There are dispersed department objectives, each department will work for their own benefits not towards the goal of the company. This will bring failure in the company. One example can be WorldCom, where the finance and legal functions were scattered over several states and communication between these departments were poor. 
(v) Over-expansion and diversification Research has shown that dominant CEO is driven by the ultimate need to succeed for their own personal benefits. They neglect the objective set for the company and work for their self-interest. They want to achieve rapid growth of the company to increase their status and pay level. They may do so by acquisition and expansion. The situation of over expansion may arise to the point that little focus is given to the core business and this can be harmful as the business may become fragment and unfocused. In addition, the companies may not understand the new business field. Enron and WorldCom can be an example for this situation where the managers did not understand how growing overcapacity would influence its investment and therefore did not comprehend the risks associated with it. 
(vi) Fraud by management

Management fraud is another factor responsible for corporate collapse. Ambitious managers may be influenced by personal greed. They manipulate financial statements and accounting reports. Managers are only interested in their pay checks and would make large increase in executive pay despite the fact that the company is facing poor financial situation. Dishonest managers will attempt to tamper and falsify business records in order to fool shareholders about the true financial situation of the company. These fraudulent acts or misconduct could indicate a serious lack of control. These frauds can lead to serious consequences: loss of revenue, damage to credibility of the company, increased in operating expenses and decrease in operational efficiency. 
(vii) Poorly Structured Board Board of Directors is handpicked by CEO to be docile and they are encouraged by executive pay and generous benefits. These directors often lack the necessary competence and may not control business matters properly. These directors are often intimated by dominant CEO and do not have any say in decision making. Example Enron and WorldCom where poorly structured board was a contributor towards their failure. 
(viii) Financial distress Firms that become financially distressed are found to be under- performing relative to the other companies in their industry. Corporate failure is a process rooted in the management defects, resulting in poor decisions, leading to financial deterioration and finally corporate collapse. Financial distresses include the following reasons also low and declining profitability, investment Appraisal, Research and Development and technical insolvency amongst others. A firm may fail, as its returns are negative or low. A firm that consistently reports operating losses probably experiences a decline in market value. If the firm fails to earn are turn greater than its cost of capital, it can be viewed as having failed. Falling profits have an obvious link with both financial and bankruptcy as the firm finds it is not generating enough money to meet its obligations as they fall due. Another cause that will lead the company to fail is the investment appraisal. Many organizations run into difficulties as they fail to appraise investment projects carefully. The long-term nature of many projects means that outcomes are difficult to forecast and probabilities are usually subjective. ―Big project gone wrong‖ is a common cause of decline. For example, the acquisition of a loser company, this has happen in the case for the failure of Parmalat Co Ltd of Italy, which made the acquisition of several losses making company where Inappropriate evaluation of the acquired company, its strengths and weaknesses.