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Do publically traded companies incentivize their companies to steal or cheat?
Posted by Mud_Till_May on 3/19/18 at 9:56 pm210
There are millions of dollars at stake in the stock market. Really there are only so many dollars available from investors.
If companies show an ability to produce a profit to get investor dollars doesnt that incentivize them to cheat to pay off investors dividends or get new investors?
If companies show an ability to produce a profit to get investor dollars doesnt that incentivize them to cheat to pay off investors dividends or get new investors?
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by SLafourche07 on 3/19/18 at 10:02 pm to Mud_Till_May
quote:
There are millions of dollars at stake in the stock market
Only a few.
quote:
pay off investors dividends
How do you pay off dividends?
quote:
If companies show an ability to produce a profit to get investor dollars doesnt that incentivize them to cheat
If a company doesn't show an ability to produce a profit does that incentivize them to cheat?
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by MikeD on 3/19/18 at 10:05 pm to SLafourche07
It incentivizes them to act in short term interest for returns vs long term steady growth
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by slackster on 3/19/18 at 10:07 pm to Mud_Till_May
quote:
If companies show an ability to produce a profit to get investor dollars doesnt that incentivize them to cheat to pay off investors dividends or get new investors?
Hell, there are plenty of companies who don't even turn a profit yet have incredible valuations.
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by BIWO on 3/19/18 at 10:07 pm to Mud_Till_May
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.
You can cook the books in the short term for only so long before you get caught it’s not worth it anymore.
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by Pecker on 3/19/18 at 10:08 pm to Mud_Till_May
As opposed to being private and not needing to make a profit?
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by Mud_Till_May on 3/19/18 at 10:27 pm to Pecker
A private owner is much more understanding than a group of hedge fund managers that answer to other people.
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by Mud_Till_May on 3/19/18 at 10:28 pm to BIWO
Im talking about wells fargo shenanigans and creating new accounts in customer names.
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by Mud_Till_May on 3/19/18 at 10:30 pm to slackster
thats so they dont have to pay dividends to their investors. Henry ford did this text book style.
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by East Coast Band on 3/19/18 at 10:31 pm to Mud_Till_May
Just ask Wells Fargo
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re: Do publically traded companies incentivize their companies to steal or cheat?Posted by Mud_Till_May on 3/19/18 at 10:32 pm to East Coast Band
If they didnt get turned in by the people theyd still be doing it.
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by jefforize on 3/19/18 at 10:34 pm to Mud_Till_May
sox auditors sniff around like crazy. internal and external.
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by East Coast Band on 3/19/18 at 10:54 pm to Mud_Till_May
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.
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by Mingo Was His NameO on 3/19/18 at 11:13 pm to East Coast Band
quote:
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.
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.
quote:
Hell, there are plenty of companies who don't even turn a profit yet have incredible valuations.
Plenty of tech startups are this way. Especially in enterprise data storage. Plenty of them operated for years, even going public without ever turning a profit. Why? So they get bought out by a larger company.
quote:
sox auditors sniff around like crazy. internal and external.
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.
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by foshizzle on 3/20/18 at 5:28 am to Mud_Till_May
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.
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.
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by VABuckeye on 3/20/18 at 6:46 am to Mud_Till_May
quote:
There are millions of dollars at stake in the stock market.
millions, huh?
re: Do publically traded companies incentivize their companies to steal or cheat?Posted by Mud_Till_May on 3/20/18 at 7:05 am to VABuckeye
billions, trillions, bagillions
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