[07/11/21 NEW] The Sad State of Accounting

The Wall Street Journal reported (July 1, 2021) that the International Accounting Standards Board (IASB), the accounting body that sets the financial reporting rules of public companies in more than 140 jurisdictions―but not in the U.S.—got a new chief: Mr. Andreas Barckow, who until now served in a similar role in Germany. Congratulations Mr. Barckow!…

[06/06/21 NEW] Don’t Be Fooled By Corporate Losses

A colleague opens his MBA finance class by asking the students: “Who would invest in a company which reported 10 consecutive years of losses?” Some of the students wonder whether they are in the right class, and no hands are raised. The instructor continues: “Too bad, if you had invested in such a company, say…

[05/10/21] Non-GAAP Earnings -Wishful Thinking or Real Profits

On April 30, 2021, the Clorox Co. reported its financials for the quarter ended in March 31: Sales, $1.78 billion, were almost identical to same – quarter a year earlier, but GAAP (generally accepted accounting principles) earnings—a loss per share of 49 cents—tumbled 126% from a year earlier. The reason: the company recognized in the…

[04/08/21] In Defense of Exxon

A Google search of terms like “Exxon’s Problems” generates an almost endless array of articles and podcasts with scary titles like: “Exxon Mobile stock is in trouble due to strange management,” “Where it all went wrong for Exxon,” “Getting booted from the Dow,” “10 Exxon Mobile lawsuites you should know about,” “Whistleblower accuses Exxon of…

[03/16/21] Earnings Guidance Is Back: Oh No, Oh Yes

Around a third of U.S. public companies provided earnings guidance ― managers’ forecast of forthcoming earnings ― either quarterly and/or annually pre-pandemic. Roughly half of these companies stopped the guidance in 2020, claiming that the heightened business uncertainty, particularly regarding the return to normal operations, precludes them from providing an earnings forecast. Makes sense. Now,…

[02/04/21] Back To The Future: FASB To Reverse Goodwill Accounting

By Feng Gu and Baruch Lev In April 2020, Tapestry, Inc. (TPR) (luxury goods) announced a goodwill write-off of $211 million related to its line of Stuart Weitzman (shoes). Investors’ reaction was swift and harsh, Tapestry’s stock price decreased by 12.7% on the announcement day. There was other news in Tapestry’s announcement that likely affected…

[01/15/21] The Rise, Fall, And Rise? Of The Conglomerates

Conglomerates — companies with entities operating in different industries or lines of business ― were in vogue for most of the 20th century. History buffs are surely familiar with the large conglomerates of the 1960s and 1970s, like Ling-Temco-Vought (LTV) with its dozen different lines of business (consumer electronics, tennis rackets, packaged meat, aircraft, steel,…

[12/24/20] 2020: Four Myths Busted

2020 was a calamitous year, but you know all about that. What you may not know is that four widely held beliefs among investors were empirically debunked in 2020. Here they are: ESG Is Not An “Equity Vaccine.” ESG (corporate environmental, social, and governance activities) is widely touted as “the best of all worlds.” Not…

[12/04/20] M&A In The Wake Of Corona

By Feng Gu and Baruch Lev Mergers & acquisitions (M&A) activity came to a screeching halt early this year. Most acquisitions planned in the late 2019 (like Charles Schwab’s (SCHW) intention to acquire Ameritrade (AMTD), or Xerox’s (XRX) plan to acquire HP (HP)) were much delayed until market outlook improved or abandoned altogether, and new…

[11/19/20] PODCAST : The End of Accounting – Financial Reporting in the Dock

Below is from a Podcast appearance on the Accounting Influencers podcast Baruch on November 16, 2020 (originally published on bdacademy.pro here). Baruch Lev is the co-author with Feng Gu of “The End of Accounting and the Path Forward for Investors and Managers.” He is Professor of Accounting and Finance at New York University Stern School of…