Amy Cockburn - AF6002 Blog

On the 15 th January 2018 one of the largest UK construction companies; Carillion, was placed into compulsory liquidation, but what was the cause of their eventual demise? To put it simply, phoney profits and ever mounting debts. As a company Carillion issued ordinary shares through the use of the London stock Exchange, which benefitted them as it meant that the capital did not have to be repaid. However, when it came to financing their projects they heavily relied on debt finance, and with the government choosing to outsource work to private companies with the lowest bids, Carillion chose to hide their financial troubles, opting to use calculations that made their projects look profitable. As Carillion started to drown due to their ever-mounting levels of debt, the best idea for them in my opinion would have been to lower dividends to shareholders to help them to stay afloat, as in order for a company to have growth prospects, the amount of returns paid to their investors...

In 1460 the first ever stock exchange was founded in Antwerp, Belgium and over the years there has been major growth of stock markets globally, with new markets appearing all around the world, in countries such as Sweden, France, the UK and Japan. So that I’m not here forever discussing each stock market, within this blog post I will focus mainly on the London Stock exchange, which didn’t emerge until late 17 th century, however, has advanced significantly since then due to a few aspects such as; financial innovation, institutionalisation (meaning that shares aren’t just being bought by individuals and investment now comes from large blocks of pooled investment funds), the removal of domestic restrictions on financial markets and changes in technology. When on the hunt to gain additional finance, companies may choose to issue shares on the stock exchange to gain investors on the basis that their company is already doing well financially. The way in which a company will i...