His philanthropy began in the s and was originally focused on breast cancer, melanoma and childhood neurological disorders. For much of the s, conditions generally favored debt financing. Between and , Milken had established unrivaled credibility and trust by building up the quality of Drexel’s debt research. His financing was crucial to Chrysler when it most needed funding to stay in business and grow. Confidence in Drexel did not erode as a result of the litigation, and Drexel’s financial position was strong enough to withstand the fines the government demanded. In the early 21st century, the same motivation badly damaged shareholders’ interests. A very cynical, though uninformed view, suggests that Milken’s philanthropy is just a case of a rich guy trying to cure his own disease.

Uses of high-yield “junk” bonds. Success through good times and bad depends on building a strong capital structure that limits risk where business conditions are volatile. In April , the lead prosecutor, assistant U. These large businesses were major contributors to political campaigns, and their armies of employees could be mobilized to write their Congressional representatives in defense of the status quo. Both had every reason to destroy him if they could. In the civil lawsuits, all plaintiffs involved settled and took their money without any admission of wrongdoing by Milken.

Alvin Toffler, the futurist and author of Future Shocksummarized the entire Milken phenomenon of success and retribution in his book PowerShift: The key was his profound understanding of capital structure and how it must change as exogenous conditions change.

michael milken wharton thesis

In fact, four of the five were found by the judge to have had zero economic effect. Milken did the opposite, opening access to capital for thousands of smaller companies. But Mike Milken started out in the s when capitalism was struggling.


Micharl features of this site may not work without it. This helped make the U. The firm’s collapse is widely considered a spectacular consequence of the greed and excess of milkfn period on Wall Street.

One value of the raiders is that they serve as the ultimate cops on the financial market beat, searching out and destroying flab and inefficiencies. In doing so, however, they have drawn heavily on Milken’s talents for both structuring deals and selling them.

One consisted of the old-line Wall Street firms who previously had had a stranglehold on the flow of capital to American corporations; the other consisted of the top managers of many of the largest firms.

Both had every reason to destroy him if they could. Kornbluth said the public assumed anyone with Milken’s level of compensation “had to be guilty. These theories, thought revolutionary at the time, are now widely taught in business schools.

What Went Wrong: An Examination of Drexel Burnham Lambert’s Descent into Bankruptcy

For all the vilification of Michael Milken, his firm Drexel Burnham easily created more wealth for American shareholders single-handedly than all the trustbusters in American history combined. He’s the one who’s sold them on junk bonds. Before Milken, the greatest financier had been J.

These health and educational advocacies have been Milken’s longstanding pursuits and have nothing hhesis do with ‘redemption.

Is it any wonder that politicians felt pressure to stop Milken’s revolution? We’re talking about people making billions of dollars a year now.

What Went Wrong: An Examination of Drexel Burnham Lambert’s Descent into Bankruptcy

At pre-sentencing hearings, the prosecution was invited to show its best evidence, after more than four years of intensive investigation, of more serious violations, including insider trading.


Manne, called takeovers “the most powerful market mechanism for displacing bad managers Why Milken supports medical research and public health. When wwharton Milken Family Foundation was established inthe focus broadened to more life-threatening diseases as well as education reform and public health. He originally faced a count indictment including insider trading chargeswhich the Justice Department knew would not stick.

By this measure, the Ebbers case is more than 34, times bigger than Milken’s. Milken’s impact on the economy. This led to enormous job creation by the Much of the wharhon and resilience of the economy today – including its ability to rebound in times whzrton adversity – is due to the way people using Milken’s financing vehicles remade ailing companies or put their entrepreneurial zeal to work.

michael milken wharton thesis

Nevada, one of the fastest-growing states in the nation, had its economy kick-started when Milken financed its casinos, newspapers and homebuilders. What happened in Milken’s legal case: These takeovers improved the quality of management at less-efficient companies and helped the economy, making it more dynamic and innovative.

There was a strong reaction from the establishment through their Congressional representatives and on the editorial pages of major newspapers. Furthermore, the filing for Chapter 11 bankruptcy protection does not necessarily mean the end of the firm.

Over the course of the investigation, Drexel took a number of actions that, in retrospect, sealed their legal fate. The milke of penalties.