Cablevision Accounting Scandal
More bad accounting (registration required), this time at Cablevision.
Just when the cable industry thought it might be out from the shadow of accounting scandals, Cablevision Systems (CVC ) said on June 18 that it had terminated the president of its American Movie Classics division and 13 other employees for allegedly improperly accelerating the accrual of expenses and fabricating invoices. A five-month review by company and outside auditors alleged that, between 1999 and 2002, about $18 million in expenses was improperly accrued a year ahead of schedule, helping to boost earnings in the upcoming year. It said it did not plan to restate financial results. Cablevision has hired former SEC enforcement chief William McLucas to investigate further. AMC's dismissed president, Kate McEnroe, and other executives, could not be reached for comment.
This is why I don't like the focus on quarterly earnings. It encourages this behavior because investors punish a company for having one off quarter, when every B-school student knows the goal of management should be to "maximize long-term shareholder value." Instead, managers are manipulating earnings to hit short-term targets.