The 'Angel of Accounting Death' Looms on Wall Street
Various stock indices closed down 2-3% percent on Monday in reaction to the growing awareness of the possibility of accounting monkey-business in publicly held companies.
"The angel of accounting death is riding through the market," said Douglas Altabef, a fund manager for Matrix Asset Advisors, which oversees $800 million. "This issue of credibility is a very serious one."
On investors minds are the following revelations and investigations surrounding accounting issues:
- Enron, the one that started it all.
- Tyco International Ltd, which revealed that it had spent $8 billion in the past three years on over 700 acquisitions that were never publicly disclosed.
- Kmart revealed last week that it received an anonymous tip about accounting irregularities that may have led to its bankruptcy.
- General Electric, "just because it has a complicated balance sheet" according to reports.
- Enterasys, a network equipment maker revealed that it was under investigation by the SEC for accounting irregularities.
- Elan, an Irish based drug maker, has been under fire in the past week because of concerns about accounting methods.
- Global Crossing, a telecom that recently declared bankruptcy, has its accounting methods under scrutiny by the SEC.