Earnings Shenanigans …. are your profits being manipulated?

In just over a month’s time investors will be bombarded with profit results announcements from listed companies for the financial year ending in June. In the financial press and from the research analysts in the investment banks there is rarely much critical analysis of the figures presented due to the vast number of companies required to report their results in a four week period. As discussed in the piece Confession Season, company management teams are always under pressure to deliver results in line or above market expectations or face the negative share price reactions. This gives management, in particular the chief financial officer (CFO), strong incentives to present the most positive picture possible of a company’s financial health.

In this week’s piece we are going to look at what a company can do to dress up their financial results and what tricks to look for when Australian corporates release their June profit results. Not necessarily the most exiting topic, but something fundamental to think about as the ASX200 oscillates wildly on Brexit Day!

Read more here.

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