Fireside Reading
Michelle Leder has a good story at Slate about the new revolution in corporate reporting. Many companies have (wisely) jettisoned the content-free and expensively glossy annual report, instead choosing to just mail their 10-Ks to investors (10-Ks are a warts-and-all report filed with the SEC). At the same time, many companies are throwing everything into the 10-K-- every dubious consulting contract, every golden parachute, every ludicrous perk-- in an effort to show how transparently forthright and upstanding they are, our good corporate citizens of America.
Leder points out the benefit for us investors-- for those of us with strong eyes and time to kill, the footnotes to these new beefy 10-Ks make for fascinating reading.
After all, corporate crime is often a matter of degree, not transgression. At what point does strategically socking funds away in a Cayman subsidiary to ensure liquidity in a currency crisis become strategically socking specific funds away in a Cayman subsidiary for limited periods to duck out on paying US taxes? It's all in the footnotes, kids. All in the footnotes.
[wik] Speak of the devil! Also in Slate, Daniel Gross tells us why private company jets are gateways to corporate, um, perfidy. There's a whiff of anti-privelige sentiment in the piece, but why shouldn't there be, given the premise?
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J
J
Well that's exactly the point of producing a bulky 10-K. You pack it with so many pie charts, letters from the boardmembers, $$ breakout by region or division, and you can claim how wonderfully transparent you are.
What you are really banking on is that no casual investor will ever sit down with a thermos of strong coffee and a hard chair to weed through all that filler.
You are dead-on: skip the narrative. The real story's in the footnotes.
heh heh... Any good social
heh heh... Any good social science major will tell you to read the footnotes.. Especially on 10-Q's which have UNAUDITED Financial Statements. So read the footnotes there more closely, that is, if there are any.
It is the special job of analysts to read those footnotes. If you ever get to listen to an analysts' call, listen for the careful smarties who ask about the footnotes. Those are the guys whose opinions you want when picking a stock. All the rest? Just pure crap.