[03/17/22 NEW] The False Promise of ESG
Lev End Of Accounting Blog
by baruchlev
2y ago
By Elizabeth Demers, Jurian Hendrikse, Philip Joos, and Baruch Lev Millions of investors and countless fund managers direct their investments to companies that are highly-rated on the basis of their environmental, social, and governance (“ESG”) activities in an attempt to do good. The claim by ESG advocates, pundits, and many academics that highly-rated ESG companies and funds also deliver superior returns bolsters this move: Doing better by doing good. The best of all worlds. But do ESG ratings really deliver on the promise? Are highly-ranked ESG  businesses really more caring of the env ..read more
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[11/11/21 NEW] Interview of Baruch Lev with The Soul of the Enterprise
Lev End Of Accounting Blog
by baruchlev
2y ago
Click or tap here to listen to the show! Ron and Ed welcome back Professor Baruch Lev from NYU Stern Business School. He was last on back in July 2016 and we discussed his book, The End of Accounting and the Path Forward for Investors and Managers. We talk more about that book and his more recent article in Accounting Today, The sad state of accounting standards. Ron’s Questions: Segment One Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ron Baker, along with my good frie ..read more
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[08/22/21 NEW] Interview with Baruch Lev about New Ways of Investing in Intangibles
Lev End Of Accounting Blog
by baruchlev
2y ago
Listen to the full interview on Apple Podcasts here ..read more
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[07/11/21 NEW] The Sad State of Accounting
Lev End Of Accounting Blog
by baruchlev
2y ago
The Wall Street Journal reported (July 1, 2021) that the International Accounting Standards Board (IASB), the accounting body that sets the financial reporting rules of public companies in more than 140 jurisdictions―but not in the U.S.—got a new chief: Mr. Andreas Barckow, who until now served in a similar role in Germany. Congratulations Mr. Barckow! Setting uniform accounting and reporting standards for most of the world is a pretty important job, particularly given the poor quality and low relevance of corporate financial statements. How do I know? A study of mine showed that even if you c ..read more
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[06/06/21 NEW] Don’t Be Fooled By Corporate Losses
Lev End Of Accounting Blog
by baruchlev
3y ago
A colleague opens his MBA finance class by asking the students: “Who would invest in a company which reported 10 consecutive years of losses?” Some of the students wonder whether they are in the right class, and no hands are raised. The instructor continues: “Too bad, if you had invested in such a company, say Amazon or Tesla, you would have been a billionaire by now.”             As you will shortly see, the instructor’s case isn’t an aberration. In fact, investing in losing companies, as long as you know which ones to choose, is very luc ..read more
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[05/10/21 NEW] Non-GAAP Earnings -Wishful Thinking or Real Profits
Lev End Of Accounting Blog
by baruchlev
3y ago
On April 30, 2021, the Clorox Co. reported its financials for the quarter ended in March 31: Sales, $1.78 billion, were almost identical to same – quarter a year earlier, but GAAP (generally accepted accounting principles) earnings—a loss per share of 49 cents—tumbled 126% from a year earlier. The reason: the company recognized in the recent quarter a $329 million impairment (loss of book value) charge of goodwill and trademarks in its health, vitamins, and supplements business. Nothing unusual here, hundreds of companies decrease (impair) their goodwill values every year. What drew wide atten ..read more
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[04/08/21 NEW] In Defense of Exxon
Lev End Of Accounting Blog
by baruchlev
3y ago
A Google search of terms like “Exxon’s Problems” generates an almost endless array of articles and podcasts with scary titles like: “Exxon Mobile stock is in trouble due to strange management,” “Where it all went wrong for Exxon,” “Getting booted from the Dow,” “10 Exxon Mobile lawsuites you should know about,” “Whistleblower accuses Exxon of fraudulent behavior,” or “Exxon: An oil giant in crisis.” Judging by the business media and investment pundits, Exxon is doomed, done for, unless it makes an immediate and sharp turn away from fossil fuels, and toward becoming an alternative energy (solar ..read more
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[03/16/21 NEW] Earnings Guidance Is Back: Oh No, Oh Yes
Lev End Of Accounting Blog
by baruchlev
3y ago
Around a third of U.S. public companies provided earnings guidance ― managers’ forecast of forthcoming earnings ― either quarterly and/or annually pre-pandemic. Roughly half of these companies stopped the guidance in 2020, claiming that the heightened business uncertainty, particularly regarding the return to normal operations, precludes them from providing an earnings forecast. Makes sense. Now, many of the guidance secessionists are returning to the fold and the panic about guidance has resumed. Earnings guidance expanded in recent years to guidance about other fundamentals, like revenues, t ..read more
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[02/21/21 NEW] The Poor State of Accounting Due to Intangibles
Lev End Of Accounting Blog
by baruchlev
3y ago
Below is a recent report from PwC which cites our book and uses one of our graphs ..read more
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[02/04/21 NEW] Back To The Future: FASB To Reverse Goodwill Accounting
Lev End Of Accounting Blog
by baruchlev
3y ago
By Feng Gu and Baruch Lev In April 2020, Tapestry, Inc. (TPR) (luxury goods) announced a goodwill write-off of $211 million related to its line of Stuart Weitzman (shoes). Investors’ reaction was swift and harsh, Tapestry’s stock price decreased by 12.7% on the announcement day. There was other news in Tapestry’s announcement that likely affected shareholders’ reaction, but the goodwill write-off was definitely a contributing factor. Studies examining investors’ reaction to goodwill write-offs report an average negative reaction of 3-5%. Why do I tell you this? Because in an interview with the ..read more
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