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What Every Investor Needs To Know About Accounting Fraud »

Book cover image of What Every Investor Needs To Know About Accounting Fraud by Jeffrey M. Madura

Authors: Jeffrey M. Madura
ISBN-13: 9780071422765, ISBN-10: 0071422765
Format: Paperback
Publisher: McGraw-Hill Companies, The
Date Published: December 2003
Edition: (Non-applicable)

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Author Biography: Jeffrey M. Madura

Book Synopsis

Everything investors who skipped accounting class need to know to spot—and steer clear of—companies whose numbers don't add up

Individual investors today are painfully aware that accounting fraud is more widespread than ever, yet often they aren't sure what this fraud looks like or even where to look. What Every Investor Needs to Know About Accounting Fraud explains common accounting maneuvers, distortions, and outright deceptions that savvy investors must be able to recognize and steer clear of, all in a concise, easy-to-understand format. Professor Jeff Madura has created a book that is both accessible and informative, and doesn't talk down to the reader. Concise yet complete, it provides investors with:

  • Methods for uncovering scams that distort revenues, hide expenses, and more
  • Studies of infamous accounting frauds and how they could have been avoided
  • A zero-tolerance investing code, useful for protecting portfolios

Table of Contents

Ch. 1The Accounting Mess1
Pt. IHow Accounting Can Distort Stock Values7
Ch. 2The Link Between Accounting and Stock Valuation8
Ch. 3Background on Deceptive Accounting16
Ch. 4How Accounting Can be Used to Inflate Revenue21
Ch. 5How Accounting Can Deflate Expenses26
Ch. 6How Accounting Can Inflate Growth35
Ch. 7How Accounting Can Reduce Perceived Risk39
Ch. 8How Accounting Can Contaminate Your Investment Strategies43
Pt. IIAccounting Controls: Out of Control47
Ch. 9Why Auditing May Not Prevent Deceptive Accounting48
Ch. 10Why Credit Rating Agencies May Not Prevent Deceptive Accounting51
Ch. 11Why Analysts May Not Prevent Deceptive Accounting54
Pt. IIIHow Boards of Directors May Prevent Deceptive Accounting59
Ch. 12Board Culture to Serve Shareholders60
Ch. 13Board Mandate to Revise Executive Compensation Structure65
Ch. 14Board Mandate to Report Stock Option Expenses71
Ch. 15Board Efforts to Tame Corporate Executives75
Pt. IVHow Governance May Prevent Deceptive Accounting81
Ch. 16Governance by the Financial Accounting Standards Board82
Ch. 17Governance by the SEC85
Ch. 18Governance Enforced by the Sarbanes-Oxley Act91
Ch. 19Governance by Stock Exchanges98
Pt. VHow Investors Can Cope with Deceptive Accounting105
Ch. 20Look beyond Earnings106
Ch. 21Use a Long-Term Perspective116
Ch. 22Don't Trust Anyone119
Ch. 23Invest in Mutual Funds124
Ch. 24Invest in Exchange-Traded Funds133
Ch. 25Invest in Other Securities137
App. AInvesting in Individual Stocks143
App. BThe Danger of Initial Public Offerings152
Index157
About the Author165

Subjects