On September 18, 2010, the Security Exchange Commission (SEC) is one step closer in revealing those companies that dump their debt at the end of each and every quarter. Some companies would dump their debt to increase profits, so they could look better in the eyes of their investors, which gives false representation. As a result, the SEC unanimously voted to implement a practice called window dressing. This will help investors to spot firms who slash their debt before quarterly earnings.
 |
| What DO Your Investmens Look Like? |
As an investor, I do plenty of research before I decide to invest in a company. There is no set statement that investors analyze to determine whether they should invest or not. Of course, annually or quarterly statements can give investors a prognostication on what direction a company is heading. Or does it? In history, Americans have learned that anything can be manipulated. For instance in late 2001, the infamous Enron scandal came to an end. Enron was known from deregulating electricity to monitoring and selling broadband waves in the air. The reality was that Enron was a house of cards! The company manipulated annually and quarterly earnings, lied to investors and analysts, as well as committed one of the biggest deceptions in American history. This was fraud on massive level. Enron had help from a highly reputable accounting firm, Arthur Anderson, well-known lawyers, and trustworthy banks.
In the near future, I do not know if implementing the window dressing is going to help stop businesses from committing fraud or give investors a better insight whether to invest or not. I support the SEC for cracking down on rules and regulations. If investors are going to invest, they should have a true representation of the company.
http://online.wsj.com/article/SB20001424052748703904304575497661581547790.html
http://www.enron.com/
No comments:
Post a Comment