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Essay / Research Paper Abstract
A 6 page paper discussing investors' willingness to accept the statement, "excluding extraordinary items." Exclusion of extraordinary items is a valid approach to considering them, according to researchers and nearly every analyst working today. Stockholders in VeriSign and Rite Aid seem to be saying that they hold a much different view than do any of these researchers and analysts, however. Annual results that appear to glow can be changed dramatically when considering extraordinary items, which can turn positive business results into negative ones. It may well be that investors will begin using examination of extraordinary items as an indicator for their investment decisions. Bibliography lists 7 sources.
Page Count:
6 pages (~225 words per page)
File: CC6_KSacctgExtra.rtf
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Unformatted sample text from the term paper:
reporting superficially seems to be prescribed, routine and hold little if any opportunity for creativity. The still-unfolding Enron scandal stands as witness that such is not the case.
For their part, businesses seem to be working to become more creative in their reporting practices so that they appear as appealing as possible to current and potential investors.
The "extraordinary item" election for unusual expenses provides an accepted means of shoving some capital-devouring expenses aside. Consistently, companies reports to investors and
analysts assessments speak of various categories of business results "before extraordinary items." The era of downsizing preceded the age of mergers and acquisitions,
and each created a bevy of charges that were (are) accounted for as extraordinary items. These are to be one-time expenses: early retirement offers, costs of combining businesses,
the cost of goodwill. Effects on Stock Price The Federal Reserve Bank of New York
hosted a conference in December 2000 centered on corporate governance. SEC chairman Arthur Levitt was the conferences keynote speaker, and his primary topic was that of enhancing the quality
of financial reporting. He states in his conference address, "No market has divine right to investors capital." In the mid-1990s, organizations learned
that they could boost stock price temporarily by announcing layoffs. Some of those layoffs never occurred; they were merely announced for the effect of nudging the stock price higher.
Laying off employees at a time of financial loss was not seen as positive, but taking the same action in prosperous times frequently was read as a management maneuver
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