ABSTRACT
Stock markets around the world have unprecedented access to the underlying drivers of corporate performance. Analysts regularly meet with CEOs and executive managers, they are given a clear view of corporate strategy and, following US changes in the relationship between investment banking and research analysts, now have access to penetrating, realistic investment information. This is a far cry from the days before US corporate giant Enron collapsed, when executives were obsessed with managing earnings and repeatedly beating EPS expectations by a penny. In the pre-Enron era, results were engineered using a variety of financial mechanisms such as ‘cookie jar’ accounting, eyebrowraising revenue practices and changing assumptions on pension fund valuations to inflate underlying trading profit. Corporate accounting was opaque, and in many instances deliberately designed to mislead.
