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Posts Tagged ‘Dishonesty’

Candor.  No, I’m not talking about condor, a bird.  I’m talking about clear and unbiased communication.  The Merriam-Webster definition uses the words fairness and honesty.

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Pic credit – Merriam-Webster

Do some corporate communications appear to contain more candor than others?  Yes, based on a proposed metric.  Does this appearance prove their candor?  Those on the outside will never know.  I’ve sometimes heard that the best corporate policy is the appearance of honesty.

Rittenhouse Rankings attempts to measure candor in corporate shareholder letters for a sample of 100 companies selected from the S&P 500.  The sample group “was selected ten years ago based on industry grouping, capitalization size and financial reputations.  Candor is quantified systematically by awarding points for informative, relevant disclosure and deducting points for jargon, confusing statements and clichés.”

Recently, the Rittenhouse Rankings 2012 Candor and Corporate Culture Survey™ was released.  In the release, it is claimed that the ten most candid companies as a group earned a greater return on a stock investment than the ten least candid companies as a group.  The difference in return appears to be large.

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Pic credit – Rittenhouse Rankings

Does candor in the corporate shareholder letter prove anything about honesty in financial statements?  No, it doesn’t.  Form inferences at your own risk.  But the list of ten companies with least candor (as defined by Rittenhouse Rankings) is interesting.  You can find a list of these companies at the right IN RED.  Two or three of these companies have been mentioned in the press for alleged financial reporting difficulties.

I, of course, recommend honesty in all things.

Wouldn’t it be great if all corporate financial statements were honest and free from bias and manipulation?  What a wonderful world it would be.

Debit and credit – – David Albrecht


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[April 1, 2013 Special Edition]  Corporate leaders from across the country today gathered on Wall Street for the first ever display of business support for honest financial statements.

Ruta Crumwell led off with an emotional call for death to all who betray the public trust.

CFOs then marched en masse to a traders pit, sawed off their pinocchio length noses, and lit a bonfire visible at the SEC.

Richard Foldover, beloved leader of defunct Lehman Sisters and the featured speaker at the event, then spoke at length on the evil of Repo 105.

The evening ended with auditors wiping up with clean audit opinions.

Debit and credit – – David Albrecht

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