Uncovering the Shenanigans
In business journalism, there is no higher honor than the Gerald Loeb Award for Distinguished Business and Financial Journalism, presented by the Anderson School at the University of California at Los Angeles. We're pleased to report that BusinessWeek Associate Editors David Henry and Nanette Byrnes are 2002 Loeb Award winners for magazines. Their pair of cover stories, "The numbers game" and "Confused about earnings?" jump-started calls for the very accounting reforms that are being debated today.
BusinessWeek readers were on to accounting shenanigans long before Enron Corp. launched this year's explosion of scandals. "The numbers game" (May 14, 2001) was the result of an examination by Henry of dozens of corporate financial statements. He exposed pro forma and other accounting gimmicks that could pad earnings and deceive investors, naming 34 companies in the process.
On Nov. 26, Byrnes and Henry teamed up on an advocacy piece, "Confused about earnings?" They charged that the pro forma legacy of the dot-com boom accelerated a nasty trend: companies making up their own ways to calculate earnings until they find one that shows profits. Byrnes and Henry provided a road map for financial statements. And they proposed rules for calculating operating earnings and a requirement to make clear how they relate to net income.
Accounting sleuths Henry and Byrnes continue on the case, along with Senior Correspondent Mike McNamee in Washington (who contributed to the Nov. 26 cover); Senior Editors Mary Kuntz and John Templeman (who oversaw much of this coverage); and correspondents throughout our bureau system.
Pleased as we are with BusinessWeek's Loeb Award winners, the real winners are you, our readers.
By Stephen B. Stepard, Editor-in-Chief