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Ceo Avoidance

Today as always, most CEOs rely on their financial advisors to know the details, to interpret the indicators, and to keep them informed. In many cases CEOs simply don’t know enough about the financial underpinnings of their own companies. Often they are challenged by an inability to effectively read between the lines of their own financial reports. As a result, they live with an awesome potential liability. Yet, despite the risk, many CEOs do not want to freely acknowledge their financial shortcomings to their staff, their boards, not even to their CFOs. Or maybe especially to their boards and CFOs. This risky scenario is being played out in corporations large and small across the country. Samuel Waksal has gone to jail, Martha Stewart has been indicted, and several of the smaller fry in the Enron case have copped pleas. But the corporate scandals' big fish; Enron's Jeffrey Skilling, WorldCom's Bernard Ebbers, Tyco's Dennis Kozlowski, swam free and enjoyed their millions in ill-gotten gains while working on their appeals. By the way, if you felt sorry for Arthur Andersen after his conviction for obstruction of justice in the Enron case, then perhaps you believed the protests that it knew nothing of WorldCom's egregious accounting fraud, even though it audited that company's books, too. The WorldCom debacle completely overshadowed another development which is Xerox's admission that it improperly accelerated revenues to the tune of $1.9 billion. After brazenly defying the SEC, Xerox finally admitted that it had misstated revenue by $3 billion, a figure that turned out to be far too low. If there's any silver lining in this national crisis of executive integrity and investor confidence, it's that the corrupt are being winnowed out. I was surprised to see at that time that AT&T and Sprint shares dropped on the WorldCom news, since a WorldCom bankruptcy could actually benefit them by eliminating a major competitor. WorldCom has been a...