----- Original Message ----- From: "Nick Arnett" <[EMAIL PROTECTED]> To: "Brin-L" <[EMAIL PROTECTED]> Sent: Thursday, January 31, 2002 9:28 AM Subject: RE: Enron related rant L3
> > But the real scandal, I think, is that our system of disclosure and > oversight totally failed. There will always be companies that try to cook > the books; something is wrong with a system that allowed it on such an > extreme scale, intuition screams at me. > I agree, and I think Gautam's post showed a good deal of what is wrong. I know the company I use to work for made a real big deal of doing the song and dance for the analysts who came through once per year. Putting on a good song and dance was very high priority for engineering. Indeed, you could see that the main function of development and engineering was to do things that would look good when explained to analysts. As Gautam said, many of the folks doing the analysis are bright, but not the most knowledgeable in the field. Thus, there is a strong economic incentive to fool the analysts. Add the incentives given to auditors to play ball with the companies that they are auditing, one has a strong disincentive for transparency. I think that the key ingredient in the lack of transparency is the inability of people charged with determining the value of companies to actually understand what is going on. This is coupled with the present goal of many/most? leadership teams to maximize stock value. What is truly amazing about this is that it keeps on going. For example, my former company just announced another 0.25% quarterly dividend. Yet, the stock price is going up. If this sorta thing happened for a year or two, I could understand the idea of future growth. But, its been going on for at least a decade. Dan M.
