List of References
Barth, M.E., J.A. Elliott, and M.W. Finn, 1999, “Market Rewards Associated with Patterns of Increasing Earnings,” Journal of Accounting Research, 37 (Autumn), pp. 387-413.
Burghstahler, D., and I. Dichev, 1997, “Earnings Management to Avoid Earnings Decreases and Losses,” Journal of Accounting and Economics, 24, pp. 99-126.
Chaney, P. K., and C. M. Lewis, 1998, “Income Smoothing and Underperformance in Initial Public Offerings,” Journal of Corporate Finance, 4, pp. 1-29.
Pitt, H. L., 2002, Written Testimony Concerning Accounting and Investor Protection Issues Raised by Enron and Other Public Companies, Testimony before the Committee on Banking, Housing and Urban Affairs, United States Senate, March 21.
Powers, W. Jr., 2002, Report of Investigation by the Special Investigative Committee of the Board of Directors of Enron Corp., February 1.
Teoh, S. H., I. Welch and T.J. Wong, 1998a, “Earnings Management and the Underperformance of Seasoned Equity Offerings,” Journal of Financial Economics, 50, pp. 63-99.
Teoh, S. H., I. Welch and T.J. Wong, 1998b, “Earnings Management And The Long-Run Performance of Initial Public Offerings,” Journal of Finance, 53, pp. 1935-1974.
Prepared by Calvin Schnure.
Currently, the granting of options is only reported in financial statements, but not deducted from income.
An important factor in making this judgment is whether the sponsor exerts control over the SPE. Control is not an issue in many SPEs, where permitted activities are narrowly limited in the vehicle’s charter.
Enron was in violation of the 3 percent rule from 1997to 2001. For a discussion, see Powers (2002).
Nonetheless, the SEC has proposed a rule that would require the Chief Executive Officer and Chief Financial Officer to certify the accuracy of their companies’ financial statements.
The NYSE proposals are currently posted for public comments and are scheduled for consideration by NYSE’s Board of Directors on August 1, 2002.