On September 5, 2008, Lehman Brothers, the fourth largest investment bank in the United States with a long history of 158, formally filed for bankruptcy according to the procedure stipulated in Chapter 1 1 of the United States Federal Bankruptcy Law, which is based on reconstruction, that is, the so-called bankruptcy protection. Lehman Brothers, as a giant who once dominated American financial circles, also went bankrupt in this financial crisis, which is not only related to the external environment such as excessive financial innovation and poor financial supervision, but also related to Lehman's own financial management goals. This paper will deeply analyze the reasons for the bankruptcy of Lehman Brothers from the perspective of internal finance. 1. Maximizing shareholders' wealth: a realistic choice for Lehman Brothers' financial management goals. Lehman Brothers was formally established on 1850. At the beginning of its establishment, the company mainly engaged in the trade of commodities with relatively rich profits, such as cotton. This company is a family business with a relatively small scale, and its financial management goal is naturally to maximize profits. At the same time, Lehman Brothers has gradually transformed from a small shop engaged in dry cleaning and small storage to a financial investment company, and its nature has gradually grown from an authentic family business to a well-known listed company in the United States and even the world. Due to the change of the nature of the company, its financial management goal has also changed from profit maximization to shareholder wealth maximization. The reasons are at least as follows: (1) The United States is a country with a relatively mature market economy and has established a sound market economy system and capital market system. Therefore, taking the maximization of shareholders' wealth as the financial management goal can get better support from the external environment of the enterprise; (2) Compared with the financial management goal of profit maximization, the maximization of shareholders' wealth takes into account uncertainty, time value and shareholders' capital cost, which is undoubtedly more scientific and reasonable; (3) Compared with the financial management goal of maximizing enterprise value, the maximization of shareholders' wealth can be directly determined by the stock price in the capital market, which is easier to quantify and operate. Therefore, in a sense, maximizing shareholders' wealth is a realistic choice for Lehman Brothers' financial management objectives. Second, the internal cause of the bankruptcy of Lehman Brothers: Maximizing shareholder wealth Maximizing shareholder wealth means bringing the most wealth to shareholders through reasonable financial management. When Lehman Brothers chose the maximization of shareholders' wealth as its financial management goal, the company quickly developed from a little-known store to a world-famous Wall Street financial giant. At the same time, Lehman Brothers was not spared in the once-in-a-century financial crisis because of its single interest subject (only emphasizing the interests of shareholders), narrow scope of application (only applicable to listed companies) and misplaced goal orientation (only focusing on the real stock price). For Lehman Brothers, the maximization of shareholders' wealth is of great significance to Xiao He. 1. Maximizing shareholders' wealth, excessively pursuing profits and neglecting operational risk control are the direct reasons for the bankruptcy of Lehman Brothers. Under the guidance of the financial management goal of maximizing profits, Lehman Brothers began to transform into the most profitable commodity futures trading in the United States at that time, and then the company began to set foot in stock underwriting, securities trading, financial investment and other businesses. During the seven years from 1899 to 1906, Lehman Brothers grew from a layman to one of the most influential stock underwriters in new york at that time. Every business transformation is the result of capital chasing profits. However, due to the excessive pursuit of profits, the company neglected the control of business risks, which eventually laid the foundation for its bankruptcy. On the surface, the bankruptcy of Lehman Brothers is a global financial crisis caused by excessive financial innovation and poor financial supervision in the United States, but in essence it is the result of the company's blind pursuit of maximizing shareholders' wealth and ignoring effective control of business risks. The direct cause of Lehman's collapse was to deeply participate in the synthetic CDO (debt-backed bonds) and CDS (credit default swaps) markets, while ignoring the huge risk that the CDS market was equivalent to four times the GDP of the United States. 2. Maximizing shareholders' wealth pays too much attention to the stock price, which makes it deviate from the business focus, which is the propellant of Lehman Brothers' bankruptcy. The maximization of shareholders' wealth thinks that shareholders are the owners of enterprises, and the purpose of establishing enterprises is to expand wealth, so the development of enterprises should naturally pursue the maximization of shareholders' wealth. Under the condition of joint-stock economy, the wealth of shareholders is determined by the number of shares they own and the stock market price. On the premise of a certain number of shares, the maximization of shareholders' wealth is manifested in the maximization of stock price, that is, when the stock price reaches the highest, shareholders' wealth reaches the maximum. In order to make the company's stock run at a relatively high price, Lehman Brothers spent 92% of its after-tax profit on its own stock for seven consecutive years since 2000. Although this helps to increase the company's share price, it also reduces the company's cash holdings and its ability to cope with risks. In addition, spending 92% of after-tax profits on the stocks of your own company rather than those of other companies is undoubtedly an investment decision of "putting eggs in the same basket", which is not conducive to diversifying the investment risks of the company; Paying too much attention to the short-term ups and downs of the company's stock price will also make the company's energy investment in actual operation insufficient, shift its business focus, and make the stock price lose its economic foundation for high operation. Therefore, the company deviated from its business focus because shareholders' wealth maximization paid too much attention to the stock price, which was the propellant of Lehman Brothers' bankruptcy. 3. Maximizing shareholders' wealth only emphasizes the interests of shareholders and ignores the interests of other stakeholders, which is the internal cause of Lehman Brothers' bankruptcy. Since Lehman Brothers 1984 went public, the ownership and management rights of the company have been separated, and the principal-agent relationship has been formed between the owners and operators. At the same time, the shareholder class (owner) and professional manager class (operator) have been formed within the company. Shareholders entrust professional managers to run enterprises on their behalf, and their financial management goal is to maximize shareholders' wealth. Relevant information can be obtained through accounting statements to understand the trustee's performance of fiduciary duties and the degree of realization of financial management goals. After going public, Lehman Brothers achieved 14 consecutive profits, 10 annual shareholder return rate 1 103% impressive business performance. However, modern enterprises are a collection of various contractual relationships, including not only shareholders, but also creditors, managers, employees, customers, governments and other stakeholders. Maximizing shareholders' wealth unilaterally emphasizes the supremacy of shareholders' interests and ignores the interests of other stakeholders, which leads to frequent conflicts among stakeholders of Lehman Brothers and low enthusiasm of employees. Although the shareholding ratio of employees is as high as 37%, the sense of ownership is weak. In addition, Lehman Brothers chose to maximize shareholders' wealth, which led the company to pay too much attention to shareholders' interests and ignored the social responsibilities that some companies should bear, which aggravated the contradiction between Lehman Brothers and society and was one of the reasons for Lehman Brothers' bankruptcy. 4. Maximizing shareholders' wealth only applies to listed companies, which is another reason for the bankruptcy of Lehman Brothers. In order to improve the overall competitiveness of the group company, Lehman Brothers carried out strategic reorganization and management system reform in 1993. Like most listed companies in China, the parent company of Lehman Brothers (American Express) stripped off high-quality assets with profitability and injected them into listed companies in order to support its listing, leaving a large number of non-performing assets to group companies, separating core business from non-core business, and separating listed companies from non-listed companies. This way of listing is doomed to be completely independent of the group company, whether in internal corporate governance or external market operation. Therefore, when assessing and evaluating its performance, we must stand at the height of the whole group company.