The Quality of Financial Statements: Perspectives from the Recent Stock Market Bubble

Stephen H. Penman是Columbia University的教授.

本文INTRODUCTION
Concems about the quality of accounting intensify as economies turn down, companies founder, and investors lose. With the bursting of the recent stock market bubble, the quality of accounting is again under scrutiny. This essay questions the quality of fmancial reporting against the backdrop ofthe stock market bubble.
Bubbles work like a pyramiding chain letter. Speculative beliefs feed rising stock prices that beget even higher prices, spurred on by fiirther speculation. Momentum investing displaces fundamental investing. One role of accounting is to interrupt the chain letter, to challenge speculative beliefs, and so anchor investors on fundamentals. Poor accounting feeds speculative beliefs. Warren Buffett recognized the dot-com boom ofthe late 1990s as a chain letter, with investment bankers the "eager postmen."' He might well have added their assistants, the analysts, many of whom shamelessly disregarded fundamentals.^ But was accounting also to blame?