Do publically traded companies incentivize their companies to steal or cheat?

It incentivizes them to act in short term interest for returns vs long term steady growth

Ever since Enron and WorldCom, it’s gotten so much more difficult with Sarbanes Oxley and auditors actually doing their jobs now.

You can cook the books in the short term for only so long before you get caught it’s not worth it anymore.

A private owner is much more understanding than a group of hedge fund managers that answer to other people.

thats so they dont have to pay dividends to their investors. Henry ford did this text book style.

sox auditors sniff around like crazy. internal and external.

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I'd be extremely surprised if Wells FArgo was the only company manipulating numbers (and their employees) to create better than looking stats for their stockholders.

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That's not why Wells Fargo was creating accounts. It was for upper management to get sales bonuses. There's definitely ways to manipulate your accounting and books to make yourself look better, but fraud isn't one of them. Most are tactics that are just too complex for most people that don't have a deep understandig of accounting to understand but they're legal.

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sox auditors sniff around like crazy. internal and external.

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Precisely. Arthur Andersen was brought down as a result of not reporting the rampant fraud at Enron. No way in hell would firms like Deloitte, PWC, and KPMG would want to suffer the same fate.

Sure, corporations have an incentive to cook the books. The problem is that eventually it becomes obvious something isn't quite right.

One of the more ingenious cases IMHO involved Intel. For awhile they made their own silicon wafers but at some point changed their mind and sold it to another company (Marvell I believe) at a loss. A pretty substantial loss actually, well below what that business was actually worth.

However, they also negotiated a side deal with Marvell that allowed Intel the ability to purchase finished silicon wafers for below market value. This compensated Intel for the unusually large loss on sale of the business. So nobody is cheated, and all this is perfectly legal so nobody got in trouble.

But why go to the trouble of this side agreement instead of just selling the business at a "correct" price and buying wafers at the market like everyone else?

Did you notice what happened here? Intel reports a loss from sale of discontinued operations, which nobody really cares about. But because they get to buy wafers at a reduced price, operating income artificially goes up, and that number is what investors do care about. The side agreement isn't a required financial disclosure either, so it allowed Intel to shift the numbers around in a way that would make it seem more profitable than it really was.

And it's all entirely legal and allowed by GAAP. That, boys and girls, is how you game the system.

billions, trillions, bagillions