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QFINANCE Blog Category: Accounting

  1. Finance Blogger: QFINANCE Editor

    A week in the world of business and finance (June 13 - 17 2011)

    Each week QFINANCE will endeavor to bring you some of the biggest news stories from the past five days in finance and business, as well as some of the most fascinating websites and links that have crossed our path. We hope you'll enjoy reading, we hope you'll have a great weekend and we hope that you'll come back each Friday to brush up on your finance and business knowledge.

  2. Finance Blogger: Anthony Harrington

    GDP – a “damn statistic” if ever there was one

    Imagine that you are an innovative economist back in, say, the 18th century, and you discover a brand new way of measuring private prosperity. You throw out old ideas of valuing a person by what they own, the value of their land, their assured income and so on. Instead, you decide to measure them purely on what they spend.

  3. Finance Blogger: Anthony Harrington

    Quant funds make up lost ground after the crash, part 1

    Quantitative managers who rely on mathematical models to assemble investment portfolios, rather than going out to meet company management and “kicking the tyres”, like traditional “long-only” equity analysts, have faced some very challenging times since the great Wall Street meltdown of 2008.

  4. Finance Blogger: Anthony Harrington

    'Accounting for Value': Ignore this at your peril, part 4

    In the closing part of the review of Accounting for Value by Stephen Penman, Professor of Accounting at Columbia Business School, I continue with Penman’s elaboration of the contribution modern financial engineering can make to value accounting, and some of his strictures on its limitations for the value investor. For Penman, the founding principle of financial engineering is the concept of “no arbitrage” that we met briefly in part 3.

  5. Finance Blogger: Anthony Harrington

    'Accounting for Value': Ignore this at your peril, part 3

    In his book 'Accounting for Value' Steven Penman, Professor of Accounting at the Columbia business school, argues that anyone concerned with real value (as opposed to speculative notions of value) should welcome modern advances made in financial models and financial engineering, but should always subject the results of such models to the test of common sense.

  6. Finance Blogger: Anthony Harrington

    'Accounting for Value': Ignore this at your peril, part 2

    In part 1 we looked at the implications of the distinction between price and value made by Stephen Penman, Professor of Accounting at the Columbia Business School. Part 2 concentrates on Penman’s argument that value accounting should not be contaminated with speculation. Here Penman is particularly exercised over the pointlessness of bothering one’s head over moment-by-moment revaluing of the business as the stock charts or asset prices yo-yo about - as is the case with mark-to-market accounting.

  7. Finance Blogger: Anthony Harrington

    'Accounting for Value': Ignore this at your peril, part 1

    How does anyone - analysts or bankers or investors or even regulators, bless them - judge the value of a commercial entity of any scale? Why is this difficult? As Stephen Penman, professor of accounting at the Columbia Business School notes, the difficulty of forming judgements of value is rooted in the limited powers us poor humans have at absorbing and processing large amounts of information. Accounting, seen from this standpoint, is simply a way of consolidating information about an organization and its operations into a few key summary numbers that we can work with. So they had better be the right numbers…

  8. Finance Blogger: Ian Fraser

    'Big Four' auditors on back foot after UK parliamentary report exposes failures

    The report into the audit profession published by the House of Lords economic affairs committee last week signals a major turning point for the accountancy profession. In a previous blog, I wrote that accountancy firms had become "so big, so conflicted, so self-interested, so obsessed with growing revenues and profits ... that they had become a danger to capitalism itself."

  9. Finance Blogger: Anthony Harrington

    Why accounting rules and investment logic can, and do, collide

    I am hugely indebted to Jim Fink’s Investing Daily newsletter for picking up on an absolutely daft confrontation between Warren Buffett’s Berkshire Hathaway and SEC accounting branch chief Gus Rodriguez. The nub of the matter concerns an obscure Financial Accounting Standards Board (FASB) ruling, namely Accounting Standards Codification (ASC) Section 320-10-35-33.

  10. Finance Blogger: Ian Fraser

    The spin-free cycle of Next's corporate reporting bodes well for future transparency

    The chief executive’s statement that accompanies a listed company's annual results is often so laced with corporate spin and disingenuousness that it's as good as useless. The document is increasingly being used to puff (embellish) the past year's performance, to present a distinctly rose-tinted vision of the future, and of course to shy away from telling investors anything about the true risks and challenges the business and its sector face.

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