Corporate America now knows the menace of liquidity risks all too well, thanks to the financial crisis that gripped Wall Street in 2008. Actually evaluating and managing those risks, however, is still mostly mystery.
Lehman Brothers, AIG, and Merrill Lynch are only a few of the firms that collapsed into bankruptcy, receivership, or forced merger during the crisis, after assets on their balance sheets suddenly froze into dreaded “illiquid” status. Unable to value the assets (let alone sell them), the firms quickly met their demise.
No wonder, then, that boards and investors alike fear illiquidity more than ever, and want more transparency ...