Several days ago the CEO of Satyam Computer Services, one of the largest outsourcing companies in India, revealed that it had inflated its earnings by over $1 bn. The shockwaves hit the company and the Indian stock exchange hard. It turns out that this was not a one time event; the company had been fiddling the books for years.
This morning, December 8, 2009, a gentleman named Marshall Mays from a company called Emerging Alpha’s Asset Management was on Bloomberg.com. He is an intelligent looking fellow in a large bow tie who, in commenting on the Satyam debacle stated unequivocally “All companies lie about their earnings.” He went on to use the example of GE who he said had been “smoothing out” their earnings for years. Perhaps what was so remarkable about this three minute interview was that there was not a scintilla of outrage or shock on the part of Mr. Mays or the interviewer.
http://sorms.blogspot.com/2009/01/lying-about-earnings.html