06 Jul Consequences of Accounting Misconducts
Consequences of Accounting Misconducts
1. Did the company restate prior years’ financial statements? If yes, use a table to show both
previously reported and restated financial numbers.
2. Identify the key dates on which the accounting misconducts were revealed to the public. Use a
graph to show the company’s stock prices during the period from three months before the first
key date to three months after the last key date. What is the effect of the exposure of the
company’s accounting misconducts on its stock price?
3. Discuss the consequences of the company’s accounting misconducts.
Suggestions
1.What additional changes in regulation do you suggest to prevent similar accounting problems in
the future?
Useful Resources
You can generally acquire the background information and other information about your company from
the internet or libraries. For example, the following link provides an overview of the Enron scandal:
http://en.wikipedia.org/wiki/Enron_scandal.
You can obtain your company’s annual reports from the SEC EDGAR database
http://www.sec.gov/edgar/searchedgar/companysearch.html. In the website, enter your company’s name
at “Company Name” or ticker symbol or CIK (Central Index Key) at “Fast Search.”
You can find stock price data at CRSP database in WRDS http://wrds.wharton.upenn.edu. Financial websites such as Yahoo Finance and Google Finance provide stock prices only for several recent years. If your accounting fraud case occurred 10 years ago, you need to access CRSP database to obtain stock price data. CRSP includes stock price data of all public companies listed in the US stock exchanges from 1925 to present.
