Essay Accounting

7450 Words Sep 5th, 2012 30 Pages


Leases: Off-Balance Sheet Financing and the Strive for Transparency Today

Brian Edman

A Senior Thesis submitted in partial fulfillment of the requirements for graduation in the Honors Program Liberty University Spring 2011

OFF-BALANCE SHEET FINANCING Acceptance of Senior Honors Thesis This Senior Honors Thesis is accepted in partial fulfillment of the requirements for graduation from the Honors Program of Liberty University.


______________________________ Gene R. Sullivan, Ph.D. Thesis Chair

______________________________ James B. Shelton, Ph.D. Committee Member

______________________________ Stephen R. Bowers, Ph.D. Committee Member

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These acts were established in response to the crashing fall of the 1929 stock market and the great depression. The boldness of certain financial indecencies that surfaced following the


crash made some of today’s scandals look like petty, schoolyard, kind of slap on the wrist misbehavior. It has been suggested that at a time when the New York Stock Exchange traded the shares of approximately 800 companies, the prices of more than 1/8 of these were openly manipulated by syndicated stock pools (Ethiopis, 2005). Before the great depression, regulations existed in the form of Blue Sky Laws on securities regulation, but were not very effective. Disclosure of financial information throughout the roaring twenties was voluntary. Even though many companies typically had audited financial statements along with an attorney review, these failed to be effective because the lawyers, auditors, and brokers worked for companies, and not for potential investors. Investors seemed to trust dividend payments rather than income statements as a trust indicator of a companies’ financial condition. Upon the creation of the SEC in 1934, companies were required to publicly disclose all relevant information. The SEC served to restore investor confidence with these new regulations by ending the misleading sales practices and stock manipulations that caused the stock market crash of 1929. With the

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