Today on an episode of NPR I heard an interview with Michelle Leder, of footnoted.org. I am glad that I caught the interview. I agree with her cause and a little more research into the corporate accounting practices in this country certainly can’t hurt.
The site is based on the idea that since all of the corporate accounting scandals, most public companies are feeling ethical and legal pressure to disclose everything to the public (read: shareholders). Great! We all think that disclosure is good. But, the funny part is that the creative accounting and funny expenses haven’t gone away, now they just get footnoted in the corporate filings.
This way, the company is some how less culpable for ridiculous expenses, just because the share-holding public was told (read: warned).
This site raises the awareness and the bar for those of us in the self-directed stock and option trading world. We do our own research to find companies we feel with offer great ROI. We burden ourselves with diversifying our own holdings – hopefully into companies that won’t spend 1 million dollars on security for the CEO when other companies in similar areas and industries seem to spend half or a quarter of that.
Since stock option trading is only as good as the company stock that the options represent, we can use the site and/or the principle to guide our own stock investing research. I thought we had a pretty good list for bad stock warning signs, but I suppose that checking the “full” list of corporate expenses should be added.
The trick is to hope you don’t find your favorite company on the list of less-than-great accounting/spending practices. Some of these companies are really taking shareholder value for granted. Their expenses should be driven by ethical behavior and the value each expense can bring to the company stock. What ROI does a 6 digit NASCAR race driving expense bring to a rent-to-own company?
As always…good luck and happy investing. Be sure to do your own due diligence research – nothing ruins a nice steady stream of option income like corporate scandal.
[tags]footnoted.org, stock investing research, stock warning signs[/tags]