Commentary: Busting Up A Balance Sheet GameNanette Byrnes and Amy Barrett
For months now, Chairman Arthur Levitt Jr. and others at the Securities & Exchange Commission have been warning Corporate America in speeches and public appearances about the deteriorating quality of corporate earnings. The message: Too many companies are resorting to accounting tricks to deliver the results Wall Street demands. In particular, they say, reserves have been abused. Reserves are supposed to dedicate part of today's income to some known future cost. But the SEC says some companies take reserves unrelated to specific costs and end up deceiving investors by skimming from good years to make bad ones look better.
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