Once they issue shares in the company to the public

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: is by selling shares in the company, that is, by issuing stock in the company. Once they issue shares in the company to the public, the company is no longer solely family owned. Now many of the public own part of it too. EXAMPLE: People who work on Wall Street often use their own “language.” For “translations” of some of that language, see Exhibit 16-3 on page 436. 16 (428-459) EMC Chap 16 11/18/05 9:33 AM ? Was the Great Crash the Culprit? O n Thursday, October 24, 1929, the New York Times ran a headline that read “Prices of Stocks Crash in Heavy Liquidation.” Elsewhere in the Times a headline read “Many Accounts Wiped Out.” These headlines referred to the stock market crash (sometimes simply called the Great Crash) that began on that October day in 1929 and continued on October 28 and 29. In some historical accounts and in the minds of many members of the public, the stock market crash in 1929 was what caused the Great Depression that followed. However, this cause-and-effect assumption is not true, and it points out the post hoc ergo propter hoc logical fallacy. Post hoc ergo propter hoc is Latin for “After this, therefore as a result of this.” Stated differently, it means “That which comes before another must be its cause.” For example, if X comes before Y, then X is the cause of Y. This statement is not necessarily true. Think of some simple examples. The teacher gives you a test before Page 435 it rains, but the teacher’s giving you a test does not cause the rain. Similarly, just because the stock market crash came before the many years of the Great Depression does not necessarily mean that the stock market crash caused the Great Depression. In fact, most economists believe that both the stock market crash and the Great Depression (with such things as rising unemployment and falling incomes) were effects of the same causes. In other words, the same factors caused both the stock market crash and the Great Depression. However, the stock market crash did change the psychological mindset of the people living in...
View Full Document

Ask a homework question - tutors are online