The New York Times

Thursday, 25th February 2010

Who Really Cooks the Books?

Written by George Traganidas Topics: Articles, Stock Investing

The New York Times
By Warren E. Buffett
Published: July 24, 2002

OMAHA— There is a crisis of confidence today about corporate earnings reports and the credibility of chief executives. And it’s justified.

For many years, I’ve had little confidence in the earnings numbers reported by most corporations. I’m not talking about Enron and WorldCom — examples of outright crookedness. Rather, I am referring to the legal, but improper, accounting methods used by chief executives to inflate reported earnings.

The most flagrant deceptions have occurred in stock-option accounting and in assumptions about pension-fund returns. The aggregate misrepresentation in these two areas dwarfs the lies of Enron and WorldCom.[…]


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