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See U.S. companies accounting fraud from corporate governance and business model

Author: TangGuLiangZhuLei From: www.yourpaper.net Posted: 2007-11-19 14:13:41 Read:
U.S. companies a series of accounting fraud incident is not the only belonging to the accounting profession, corporate governance and business model defect is the most important root cause of the U.S. corporate accounting fraud. These events are rare cases of rational analysis of the American corporate system construction, business model, competitive strategy, incentive systems, accounting mode concept, for we are committed to improve market supervision, love aspects of corporate governance, accounting system provides useful inspiration.

Corporate governance must be harnessed CEO: reflection of the company CEO system

U.S. accounting fraud culprit was undoubtedly the company's management, including the board of directors, senior management staff. There is a saying: all problems are human problems, the problem of people need the system to regulate. American business to form a culture that since the 1990s, CEO corporate elite of the elite, they launched and led a wave of corporate innovation, corporate affairs decision should be handed over to the CEO to. A CEO is actually played by half, chairman of a general manager's role. The CEO position important to accelerate the company's decision-making efficiency, the powers of the CEO who swelling. Thus weakening the powers of the internal checks and balances, it is bound to increase the likelihood of damage to the long-term interests of the enterprise. Specifically, if the CEO is not only responsible for business decision-making, but also the absolute control of corporate information disclosure, under certain conditions, they can be made out of consideration for their own special interests also improper disclosure of financial information in the decision financial disclosure for its own services. For example, the U.S. Securities and Exchange Commission in the case of allegations of the world's communications companies to conceal 3.8 billion cost that the company has been in the financial accounts of tricks "management guidance and recognition. Describe a work in Wall Street investment bankers: supervision by a strong shareholders, the Board is non-existent; almost all the directors are "insiders" of the CEO of the company, the company's management in the board of directors to establish the absolute authority, almost no Board through the thing. (Of Zhao Xi, 2002), corporate governance must be harnessed CEO and the CEO's role should not be a captain, can not decide the direction of the development of enterprises, but should be a helmsman, grasp the course and speed along the road in the enterprise.

Recently seen a very interesting study comparing corporate governance structure Bender Professor sentence he said aspects of corporate governance and corporate system reformers seems to stock movement, stock culture is very interested and open to the U.S. company structure, dispersed ownership, strong managers weak owners a system full of interest, even if they understand of socialism with Chinese characteristics is not as good as the stock movement. He reminded the Chinese enterprises and entrepreneurs, to discuss corporate governance structure, can learn from some European countries even focus on the family tradition in Japan, stressed that such a corporate governance structure of shareholder control and community relations.

However, we explicitly a model of corporate governance "no best, only better, but also can not deny or doubt the advanced nature of the U.S. capital market system and corporate governance system, as well as American society powerful" super error correction function ". President of the United States such as the recent reform bill signed in July this year, the company launched a new deal with various accounting fraud initiatives: (1) periodic reports of the Company shall be the CEO and CFO certification; still check out the problem be certified, CEO and CFD may be at 20 years, 25 years in prison and a fine of $ 5,000,000. Debts are born not relief debt due to violation of the Securities Act of acts of fraud, market operations, the debt burden does not disappear due to the bankruptcy of the debtor; (2) prohibits companies from providing loans to the CEO and CFO; company's financial report major irregularities, managers lose the performance reward; protection Report; fraud or incompetence, may conditionally or unconditionally prohibits the director and other management positions in listed companies; set up composed entirely of independent directors, the company If the SEC that the directors and managers of listed companies Audit Committee; authorized the establishment of the Public Company Accounting Regulatory Commission (PCAOB) "to strengthen industry oversight of the external audit; while providing no external audit and unrelated to the audit service. This will also mean that the corporate governance guidelines formed by the United States in the 90s of the last century, is a fundamental change, led by the management of the corporate governance structure will be regulatory-driven corporate governance structure replaced the company's management is certainly in this fraud and The antifraud The Battle is passive. Magic goes, must Dogo battle, corporate governance and capital markets, the accounting system is bound to in antifraud the contest grow mature.

2. Correct concept of survival of the enterprise: abandon the corporate stock and raw, financial logic with industry logic can not be parted ways

Enterprise earnings and Health, but the business arena should be in the commodity market or capital market? Source of profit or in mergers and acquisitions operations, mainly in the commodity business? In the field of modern capital markets, prices decide the value, or the value of determining prices? The answers to these questions should be very clear. The regular error but the operation. For example, we have a very high regard "earnings" reflect the the stock asset profitability: price = price-earnings ratio earnings per share. Due to the price-earnings ratio of the enlarged utility that weak micro growth of earnings per share, the price-earnings ratio will the U.S. capital market's price-earnings ratio of 20 times (average 20) to enhance stock prices, it seems that the value of the company to increase the number of times (because it appears that the company's share price is the value of the company). Profit controls still exist, especially in the stock market, there price manipulation, there are still information fraud, non-validity of the conditions of the market, the "bubble" function of the price-earnings ratio and bring confusion to investors must not be underestimated.

M & A has been dominated An important feature of the development of the U.S. companies, especially since the beginning of large-scale mergers and acquisitions in the 1990s era such characteristics toward the extreme. This period of mergers and acquisitions more way of the "Convertible acquisitions"; convertible acquisitions rarely rely on cash, and more dependent on the characteristics of the market value of the merger parties, such acquisitions as mergers and acquisitions management uses each The kinds of skills (which apparently also includes accounting fraud) to push stock prices into a powerful impetus. As long as there is a high market value (even foam sexual), mergers initiator have success is the most important or even the only condition. Alive through the acquisition of MIC's case, he is clever use far overvalued market capitalization. The world communication time up to 90 times earnings, the price-earnings ratio is far below the MCI merger, the world's communications will be immediately earnings per share rose 20%. It now appears that "the market is, after all, is an effective, all expansion, if not Based on enterprises nuclear; dynamic competitiveness, not based on the M & A commodity business means rather than an end, does not seek financial M & A and commodity management complement each other extremely dangerous. Only concerned with the capital markets and mergers and acquisitions expansion, to the neglect of the commodity markets and business profits so that enterprises can only be short-lived.

Value accounting system is to prevent accounting fraud carrier

For Enron, WorldCom accounting scandals in a Zhuang Zhuang, addition to dissect these "giant companies" fall outside their own reasons, but also to reflect on the deviation of the accounting model, focus on historical information, a single earnings per share, current earnings financial reporting model is outdated. these companies fall from huge revenue and profit. This we have to think about a problem: our value-oriented operating benchmark undue reliance on the carrying amounts of revenue and profit targets. We can not the suspected false income, false profits frequent revenue, profit oriented. This should dilute the impact of the profit targets of the company's value judgments, strongly advocated "operating cash flow", "free cash flow" indicators. Financial concept is clear: investors investing in the future of a company, rather than now, more than in the past; basic decision variables embedded value is not a book surplus, but the company get the size of the free cash flow in the future and speed. It seems the financial concept of value-oriented, information disclosure on the use of slow is an objective fact. The inevitable failure or deviation of the value-oriented to appear invalid use of resources as well as rent-seeking behavior. Company for cash real ability is the basis of evaluation of the security and value of the company's wealth, is also the capital of the risk-return premise. short-term accounting profits of increasingly fierce. We do not figure out a quarterly reporting system with investors increasingly look do not look at the short length requirements, who is due to, who are the fruit. But one thing is certain: the increasing requirements to maximize short-term profits. This "short-term profit-oriented is reflected in the stock market stable current income and profit growth of the company more vulnerable to the preference of Wall Street, the stock prices to continue to climb. Under this reporting system into a dilemma: One is to come up with to the satisfaction of the investors financial reporting; Second, to ensure the normal development of enterprises. Many times fish and bear's paw can not have both, so the care of fish and bear's paw. Company stock or stock options held by the senior in promoting upward momentum of the stock, of course, will comply with current affairs, and strive to make each phase of the profits of the company looks beautiful, here the one hand, it may take some illegal means, such as forged statements; On the other hand, the tradeoff between the long-term industrial plan with short-term profit is even more prominent. For those with longer payback period, from the long-term the company will bring a lot of returns, but the short term is difficult to see the obvious economic benefits of investment projects for consideration of the share price, or to ׳ʿ, despite the pain, or Non-off is not available. In this short-term profit-oriented business and decision-making is difficult to reflect the "going concern". Society as a whole, especially as the French sociologist Arbel said: 'capitalism more short-term wealth creators, the more you will become a long-term social value destroyer. "
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