Corporate ethics

Three suggestions for investors: First, beware of companies displaying weak accounting…. When managements take the low road in aspects that are visible, it is likely they are following a similar path behind the scenes.… Second, unintelligible footnotes usually indicate untrustworthy management. If you can’t understand a footnote or other managerial explanation, it’s usually because the CEO doesn’t want you to. Enron’s descriptions of certain transactions still baffle me. Finally, be suspicious of companies that trumpet earnings projections and growth expectations. Businesses seldom operate in a tranquil, no-surprise environment, and earnings simply don’t advance smoothly (except, of course, in the offering books of investment bankers).… Managers that always promise to “make the numbers” will at some point be tempted to make up the numbers.