The End of Accounting

As part of my FINA 470 lecture on Goodwill, Intangibles and Research and Development, I include a brief discussion of The End of Accounting and why the authors believe that US GAAP no longer produces reports that are meaningful for capital market decision making.  O’Shaughnessy Asset Management has released a new research report discussing Negative Equity and Veiled Value.  It makes a parallel argument to the book.

A contributing factor to the negative equity and erosion of corporate book value is the high level of equity buybacks.  Research indicates that the increasing buybacks are not contributing to increases in stock prices.  Academic research contends that the principal beneficiaries are management and not shareholders.