Financial Restatements: Methods Companies Use to Distort Financial Performance Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Over the past 10 years, the number of public companies, which would have to restate its financial results increased dramatically. Regardless of codes derived from an aggressive application of accounting standards and the need to correct the deliberate distortion of the results of the management, the result was often the same: a sudden and significant loss of shareholder value. In many cases, the conversion process has resulted in a significant disruption in the company, including the investigation of financial regulators, the resignation of the leaders and other senior officials, a large-scale restructuring and layoffs, as well as legal action against the board of directors, auditors and other stakeholders. Impact on the organization often felt for many years, holding significant financial and reputational loss. This is considered five categories of financial codes as defined Charles W. Mulford and Eugene E. Comiskey: recognition of premature or fictitious revenue, aggressive capitalization and extended amortization costs, inadequate assets and liabilities and other items of income, as well as problems with the cash flow statements. Examples are given for each category based on the events in Catalina Marketing, Krispy Kreme, Royal Dutch Shell, Royal Ahold, Nortel Networks, and Parmalat. "Hide
by Madhav V. Rajan, Brian Tayan Source: Stanford Graduate School of Business 21 pages. Publication Date: June 10, 2008. Prod. #: A198-PDF-ENG