More Than a Numbers Game


I recently finished an excellent book called More Than A Numbers Game: A Brief History of Accounting. It's an excellent book because it highlights many of the interesting accounting controversies over the past century, and how politics has influenced the development of accounting. The book delves into the differences between financial and tax accounting, the problem of valuing intangible assets, the problems created by the uneven nature of inflation, and more modern issues such as SOX and options valuation.

This book isn't for everyone. If you are an accounting guru, you probably know this stuff already. If you don't know the basics of accounting, this book will probably be over your head. If you have a solid accounting foundation, but think it's a boring and uninteresting field, pick up this book. It may change your mind.

Here is one of my favorite quotes from the book:

With the rise of aggregators reporting consensus estimates and earnings surprises, EPS became a ridiculously important measure of corporate performance. A majority of 400 executives surveyed by three professors admitted they would delay maintenance or advertising expenditures — or even give up good investments — to smooth reported EPS because stock market reactions to an earnings miss became so significant.

You will never see earnings releases covered here on Businesspundit, because I consider them irrelevant, and I think managing to next quarter instead of the long-term is foolish.

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  • Love your last comment. It’s always bothered me that the nightly “business report” is actually the nightly stock market report. The stock market is not business any more than the tote board is the horse race.

  • Hi Rob,

    I think EPS manipulation mania is the ugly side of the Jack Welsh legacy. The way his team used GEC to come in exactly on the nose vs. plan for how many straight quarters (and how the street rewarded this ‘behavior’) created the mindset described in the post.


  • Wally is so right,(“the stock market is not business”). I hoping that Fox’s business channel will figure that out. So far CNBC is hopeless.