Cendant Shareholders

Paper Summary:

This paper discusses Cendant's failure to complete a thorough due diligence procedure during its merger with CUC in 1998. This merger resulted in severe losses for Cendant's shareholders because CUC was, shortly after the merger was completed, found to be involved in accounting and financial scandals that cost Cendant over $2 billion to settle without accepting fault or blame. The paper observes that the problem is two fold with one aspect being a management problem and the other being an ethical problem.

From the Paper:

" As CEO, Silverman completely failed in his fiduciary capacity to ensure that proper procedures were followed in the CUC merger. On the ethical side, Silverman's massive accumulation of wealth from 1998 to 2003 coincided with the severe decline of the company's stock price and the subsequent loss of value for its shareholders."

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