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Getting It Wrong the First Time (PDF)

Getting It Wrong the First Time (PDF)

by Rick Turoczy on March 6, 2006

Companies with U.S.-listed securities filed 1,295 financial restatements in 2005, nearly double the previous year’s mark. That’s about one restatement for every 12 public companies—up from one for every 23 in 2004. Of these, 100 were by foreign companies. About the only thing rising faster is executive compensation. The burden of these errors, of course, falls on investors, who rely on companies’ management to get the numbers right the first time.

But to hear a relative handful of senior executives and policy makers tell it, the big problem isn’t that investors got bad information the first time; rather, it’s that Congress overreacted when it passed its landmark Sarbanes-Oxley Act in 2002 and that, for the good of global capitalism, Congress now should relax the scrutiny it imposed on corporate boards and executives after the collapses of Enron and WorldCom. As we write this report, the Securities and Exchange Commission’s Advisory Committee on Smaller Public Companies is recommending just that.

Getting It Wrong the First Time (PDF)

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