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How to Detect Business Fraud
11–20 of 73 posts
Re: How to Detect Business Fraud
#12> Each stock fraud is fraudulent in its own way. But there are common elements. One is a breach between earnings as defined by Generally Accepted Accounting Principles (GAAP) and non-GAAP measures. Another is an increase in “days payable outstanding”, a yardstick of how long it takes a company to settle bills with suppliers. Delay boosts cashflow, at least for a while. So does gathering more quickly payments you are…
Thanks, I couldn't read the article.
Re: How to Detect Business Fraud
#13Highly recommend "lying for money" by Dan Davies, a very readable account of a wide range of business frauds.
Other great reads: The Match King The Smartest Guys in the Room Bad Blood Billion Dollar Whale Also, famed short seller Jim Chanos teaches a class on frauds and recently posted this short list of recommendations: https://twitter.com/WallStCynic/status/1256962642499035137?s...
"The Smartest Guys in the Room" was great, indeed. Also, the book from the guy who reported Madoff to the SEC sounds interesting: https://en.wikipedia.org/wiki/No_One_Would_Listen
Re: How to Detect Business Fraud
#14Good investigative reporting into shady business practices good for this world.
However short selling companies before dropping your investigation is a massive conflict of interest. Muddy waters is incentivized to produce a scandalous hit piece, rather than necessarily do fair or accurate reporting. They will make money regardless. The damage their reporting does may make a self-fulfilling prophecy, ensuring they don't get a reputation hit for inaccurate scoops.
I'm surprised the economist didn't even include a nod to the potential manipulation going on here.
Re: How to Detect Business Fraud
#15it would be interesting to codify the known heuristics of forensic accounting into a software package (maybe even AI all the things!), then create a company out of it in partnership with prosecutors and regulators to root out fraud like this through both technological and legal means. i'm sure there have been some efforts to that end, though not commonly known.
it would help rebalance the legal system toward the service of people over corporations.
Re: How to Detect Business Fraud
#16Good investigative reporting into shady business practices good for this world. However short selling companies before dropping your investigation is a massive conflict of interest. Muddy waters is incentivized to produce a scandalous hit piece, rather than necessarily do fair or accurate reporting. They will make money regardless. The damage their reporting does may make a self-fulfilling prophecy, ensuring they don…
Absolutely. Just look at Pershing Square‘s Bill Ackman. He goes on CNBC essential calling for the end of the world, turns out he had credit protection on bonds and tuned a huge profit[1].
[1] https://markets.businessinsider.com/news/stocks/bill-ackman-...
Re: How to Detect Business Fraud
#17Good investigative reporting into shady business practices good for this world. However short selling companies before dropping your investigation is a massive conflict of interest. Muddy waters is incentivized to produce a scandalous hit piece, rather than necessarily do fair or accurate reporting. They will make money regardless. The damage their reporting does may make a self-fulfilling prophecy, ensuring they don…
How is that different from posting a positive article after investing in a company? Company press releases have a conflict of interest but they still contain valuable data. In the same way bearish research brings up issues that no one else wants to talk about, readers should expect the source to have a bias since no one is completely objective.
Re: How to Detect Business Fraud
#18Good investigative reporting into shady business practices good for this world. However short selling companies before dropping your investigation is a massive conflict of interest. Muddy waters is incentivized to produce a scandalous hit piece, rather than necessarily do fair or accurate reporting. They will make money regardless. The damage their reporting does may make a self-fulfilling prophecy, ensuring they don…
Absolutely. Just look at Pershing Square‘s Bill Ackman. He goes on CNBC essential calling for the end of the world, turns out he had credit protection on bonds and tuned a huge profit[1]. [1] https://markets.businessinsider.com/news/stocks/bill-ackman-...
And a thousand other hedge fund managers talk about how bright the future is after investing in stocks. Maybe we shouldn’t rely on hedge fund managers for our opinion of the economy.
Re: How to Detect Business Fraud
#19it would be interesting to codify the known heuristics of forensic accounting into a software package (maybe even AI all the things!), then create a company out of it in partnership with prosecutors and regulators to root out fraud like this through both technological and legal means. i'm sure there have been some efforts to that end, though not commonly known. it would help rebalance the legal system toward the serv…
The problem is getting anyone to care while the fraud is still making money
Re: How to Detect Business Fraud
#20Good investigative reporting into shady business practices good for this world. However short selling companies before dropping your investigation is a massive conflict of interest. Muddy waters is incentivized to produce a scandalous hit piece, rather than necessarily do fair or accurate reporting. They will make money regardless. The damage their reporting does may make a self-fulfilling prophecy, ensuring they don…
Is it a conflict of interest? Seems to be directly related to the short-seller's interest.