By Elizabeth Demers, Jurian Hendrikse, Philip Joos, and Baruch Lev Millions of investors and countless fund managers direct their investments to companies that are highly-rated on the basis of their environmental, social, and governance (“ESG”) activities in an attempt to do good. The claim by ESG advocates, pundits, and many academics that highly-rated ESG companies…
[11/11/21 NEW] Interview of Baruch Lev with The Soul of the Enterprise
Click or tap here to listen to the show! Ron and Ed welcome back Professor Baruch Lev from NYU Stern Business School. He was last on back in July 2016 and we discussed his book, The End of Accounting and the Path Forward for Investors and Managers. We talk more about that book and his…
[08/22/21 NEW] Interview with Baruch Lev about New Ways of Investing in Intangibles
Listen to the full interview on Apple Podcasts here.
[07/11/21] 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] 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,…
[02/21/21] The Poor State of Accounting Due to Intangibles
Below is a recent report from PwC which cites our book and uses one of our graphs:
[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…
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