April 5 (Bloomberg) -- Here’s an unsettling fact for anyone
thinking of ever buying shares in a newly public company: Even
if its executives know their internal accounting systems are a
wreck, they aren’t required to disclose this until after the
company goes public.
It is a lesson that Groupon Inc. shareholders have learned
the hard way. Groupon shares fell 17 percent on Monday, after
the online coupon company said late last week that it had
identified a “material weakness” in its internal controls over
financial reporting, as of Dec. 31. The Chicago-based company
also revised its fourth-quarter results to show lower revenue
and a larger loss, after finding errors in its accounting for
customer refunds. At $14.54, the stock now sells for 44 percent
less than it did after the first day of trading.