Financial Analysis (called Security Analysis on Wall Street) can be less than totally objective. How big a problem do you think this is? What can be done to manage potential conflicts of interest? Maybe we just have to live with it and search out the hidden agendas. What do you think? How do you react to Sarbanes Oxley? Does regulation work? If you think it does, how did Madoff happen, or ENRON? Before you post you might want to re-read the "Finance in Action" item on page 68.
I'm not professing to be an expert at this subject but I do believe this is a huge problem in the economy. Big corporations have internal auditors that report the information given on the financial statement. They also can have external auditors that are paid to assess their corporation. However, they are not seen as objective and/or truthful. In fact, the outside auditors have been threatened that if they don't cushion the numbers, they will never work for the corporation again.
(Block, 68) The same type of corruption has happened with arbitration. If the representatives don't rule in the business's favor, they most likely will never have a job with them again.
I don't feel we should have to 'live with it'. This is corruption that contributed to the huge financial crisis in the mid 2000's. It's unacceptable and America should stand for honesty. I think people are afraid of these companies because we are not near as experienced with the inner financials of a huge corporation. A little commoner like me can't take down a company I feel may be involved in illegal activities. Because of this, I feel the Sarbanes Oxley Act has been beneficial. The job of the SOX is, "To protect investors by improving the accuracy and...