[ale] OT: corporate finance 101

[Geoffrey]

Chris Farris wrote:


> The only scam comes in when say a CEO, lets call him Mr. LeDay, lies
> about how well a company is doing and their accounting firm (for our
> fictional example Andersen Arthur) is so incompetent they can't see
> through the lie (or perhaps doesn't want to).


See the problem with this whole approach is the downward spiral effect 
this can cause.  CEO says it's been a rough year and we've got another 
coming up, but after that, it's all smooth sailing.  You get a bunch of 
folks dropping their stock, which causes the stock price to drop, which 
costs the company money, and then the CEO has to amend his previous 
statement to indicate there will be 2 more rough years, not one.  More 
people dump the stock.

I believe this happened a lot with tech stocks lately.  People weren't 
patient to see a company spend some cash to upgrade/purchase 
facilities/equipment.  They saw the numbers, panic insues, they sell, 
the stock drops, on and on.

I'm not saying that the CEO should lie.  My concern is that the life 
blood of many companies (stock) is in the hands of a lot of impatient, 
and often times ignorant people.
-- 
Until later: Geoffrey		esoteric at 3times25.net

"...the system (Microsoft passport) carries significant risks to users that
are not made adequately clear in the technical documentation available."
- David P. Kormann and Aviel D. Rubin, AT&T Labs - Research
- http://www.avirubin.com/passport.html


---
This message has been sent through the ALE general discussion list.
See http://www.ale.org/mailing-lists.shtml for more info. Problems should be 
sent to listmaster at ale dot org.