Pro forma (non-GAAP, adjusted) earnings are much higher than GAAP-compliant earnings. The GAAP gap is widening. Should something be done about this?
Companies make up their own metrics to define success, continuing trend of non-GAAP measures. What do you think about this? Is it “ok”?
Should bankers’ bonuses be held back for 3 years in case a clawback is needed? Should it be 5 years? 10 years? Who should be included in the withheld bonuses? What do you think could be some of the unintended consequences of holding back bonuses?
Excellent points raised in this article. What are the implications for firms seeking relatively cheap credit? Are the days of borrowing (cheaply) to buy back stock coming to an end? Should capital use be regulated? Will it politicize credit?
We’ve seen this before, namely firms using non-GAAP earnings measures that make firms look better than they do under GAAP-compliant earnings. Reg G covers how firms may present non-GAAP measures. So, why is this a newly urgent problem? In your opinion, should anything new be done?
Can you describe why the average DB plan is only 78% funded as of 2/16, whereas it was 95% funded at the end of 2013?
Herbalife misstated a pro forma measure that it created. In your opinion, should such disclosures (pro forma metrics) be regulated or audited?
EBBS, or earnings before the bad stuff, was cumulatively + $45 billion in energy sector in 2015. On a GAAP basis, earnings totaled a loss of $48 billion. Which reflects “reality”? Why? What should be done about this disparity, if anything?
Do you think allowing multinationals to report in IFRS would weaken or strengthen financial disclosures? How would you test your hypothesis?
GE’s CEO missed a performance target and therefore did not receive all of his performance compensation, which was in the form of stock awards. In your opinion, should the pay have been in the form of stock options, instead of stock awards (restricted stock)? Why or why not?
Moody’s downgraded Anglo American’s debt to “junk.” Is there an obligation for firms to give prospective disclosures that would be an advance warning to such potential actions by rating agencies? If not, in your opinion, should there be? Are there indicators in the financial statements? If so, what are they?
Why do you think Boeing’s accounting is being “probed” if the accounting complies with GAAP? Have you heard of “program accounting” before this case? Could you explain it? Should firms be investigated if good faith estimates prove to be, in hindsight, inaccurate?
Western Union’s earnings were impacted by the strong dollar. If you were on a job interview, and were asked, could you explain how FX translation affects revenue?
In your opinion, are capex budgets leading indicators of firm (and economy-wide) performance? Are they required disclosures for public firms, and if so, do you know where they are disclosed in the SEC filings?
If you were CEO of a small, community bank, what would you tell Russ Golden and Tom Curry re: the proposed accounting standard that would require you to book expected loan losses over the life of a loan on the day you make the loan? Why is this accounting standard being proposed?
If you were CFO, how much control do you think you have over you own cost of capital? What would you try to do to lower it?
The IASB has passed a new rule that will require most leases to be capitalized. If investors are “reasonable” and if markets are efficient, who cares where the lease information appears? In your opinion, does the new rule call into question these assumed attributes of investors and markets?
What would you do as CEO if you have “large” cash holdings? What besides investment opportunities would affect the decision? What role does the tax code play?
Banks have to record the change in fair value of their own debt in income, under the fair value option. Why is this a “headache”? Does it matter if the change is recorded in income or other comprehensive income? Why or why not?
