In six pages the statement 'excluding extraordinary items' is considered within the context of investors' willingness to accept this as indicators for investment choices. Seven sources are cited in the bibliography.
Name of Research Paper File: CC6_KSacctgExtra.rtf
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reporting superficially seems to be prescribed, routine and hold little if any opportunity for creativity. The still-unfolding Enron scandal stands as witness that such is not the case.
For their part, businesses seem to be working to become more creative in their reporting practices so that they appear as appealing as possible to current and potential investors.
The "extraordinary item" election for unusual expenses provides an accepted means of shoving some capital-devouring expenses aside. Consistently, companies reports to investors and
analysts assessments speak of various categories of business results "before extraordinary items." The era of downsizing preceded the age of mergers and acquisitions,
and each created a bevy of charges that were (are) accounted for as extraordinary items. These are to be one-time expenses: early retirement offers, costs of combining businesses,
the cost of goodwill. Effects on Stock Price The Federal Reserve Bank of New York
hosted a conference in December 2000 centered on corporate governance. SEC chairman Arthur Levitt was the conferences keynote speaker, and his primary topic was that of enhancing the quality
of financial reporting. He states in his conference address, "No market has divine right to investors capital." In the mid-1990s, organizations learned
that they could boost stock price temporarily by announcing layoffs. Some of those layoffs never occurred; they were merely announced for the effect of nudging the stock price higher.
Laying off employees at a time of financial loss was not seen as positive, but taking the same action in prosperous times frequently was read as a management maneuver