Widespread “corrections” in the financial statements of listed companies?
February 15, 10 by Mark75[AUTOMATIC TRANSLATION - SEE NOTE]
An interesting article in the Wall Street Journal reports a study that would give mathematical proof that a significant number of American companies listed would “run” the numbers for the profits to “meet the expectations of shareholders” (in other words, fix the results. ..), which leads to some reflection on the need to further improve the transparency of financial statements of listed companies.
The study is somewhat clever for its logic. The study went to see the results of a large number of companies over a period of more than 25 years (a total of half a million monitored distributions), and going to see the smallest decimal figure. The result is that the sums ending in “4″ are significantly under-represented compared to what should be a random distribution. The suspicion is that the companies tend to “correct” return to the last decimal of the dividend per share will change from 4 to 5. In this way, due to rounding, which are then systematically made, the dividend appear taller. In practice, if the dividend per share were 12.4 cents for example, would be made so that it becomes 12.5: this is because with rounding that normally are made, the first would appear as 12 cents, while the second as 13.
A strategy that has its reasons in the attention of many investors to the achievement of profit, and the tendency to reward those titles that overcome – even for just one cent – expectations.
