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Imagine, if you will, a one-hundred page prospectus. One hundred pages of facts twisted beyond all manner of reason, with pie crust promises of castles in the s
by raganwald 15y ago
Imagine, if you will, a one-hundred page prospectus. One hundred pages of facts twisted beyond all manner of reason, with pie crust promises of castles in the sky. Buried within those pages are the SEC-mandated numbers you need to compare this company to any other company trading on thhe exchange.
Now imagine every company does this, but each in their own way with their own entirely orthogonal way of presenting their hallucinations. Does this make the mrketplace more efficient? More pragmatically, if any such company fails, does this increase or decrease investor trust in the exchange?
The SEC is ultimately responsible for building and maintaining trust in the process. A succession of IPOs where the proper GAAP numbed have been reduced to fine print and footnotes is contrary to their mandate.
- dodo53 15y agook that makes sense, thanks
- ramanujan 15y agoDefinitely agree that standardization of financial metrics is highly useful for comparing across companies. Strongly disagree that the SEC or any government agency can be relied upon for anything related to "trust" in this space. Did Sarbanes-Oxley prevent the financial crisis? The SEC is just about building Maginot Lines. Caveat emptor has and remains the operative guidance for investors. Private ratings agencies have had a poor track record of late, but they are at least somewhat more reliable in that they aren't completely under the thumb of the US government.
- raganwald 15y agoSo long as we understand that I never suggested that prudent investing relies on the investor performing their own careful appraisal of the investment or relies on a regulatory agency--of any kind--screening investments.
- tedunangst 15y agoI believe you meant GAAP numbers, but I thought numbed was also a good word. :)