Wheel, deal, and steal : deceptive accounting, deceitful CEOs, and ineffective reforms / D. Quinn Mills.

Format:

Book

Author/Creator:

Mills, Daniel Quinn.

Series:

Financial Times Prentice Hall books

Language:

English

Subjects (All):

Corporations--Corrupt practices--United States.

Corporations.

Corporations--Corrupt practices.

Accounting--Corrupt practices.

United States.

Corporations--United States--Accounting.

Accounting.

Accounting--Corrupt practices--United States.

Chief executive officers--Professional ethics--United States.

Chief executive officers.

Professional ethics.

Business ethics--United States.

Business ethics.

Physical Description:

xvii, 300 pages : illustrations ; 24 cm.

Place of Publication:

Upper Saddle River, NJ : Prentice Hall/Financial Times, [2003]

Summary:

When it comes to the global financial scandals, it wasn't just Enron, or WorldCom, or Global Crossing, or Tyco... and it's not over. Just under the surface, financial scandal continues to bubble at many of the world's most respected "blue chip" companies -- and reforms have barely scratched the surface. In Wheel, Deal, and Steal, Harvard Business School professor D. Quinn Mills shows investors exactly how the financial frauds work, where the money goes, who's to blame, and what they can do about it. He explains how imperial CEOs continue to mislead their investors -- and how the rules intended to protect investors continue to fail. Mills outlines comprehensive reforms that can clean up the system and keep it clean, by finally eliminating the incentives that still promote massive corruption. Best of all, he shows small investors how to protect their remaining assets -- and, in some cases, even recover their losses.

Contents:

Part I What Happened to Investors' Money? 1

Chapter 1 Why You Should Read This Book 3

Investors Aren't Primarily to Blame for Their Losses 4

Power Is at the Root of the Corporate Financial Scandals 6

The Internet Bubble and The Big Company Scandals 7

The Decay of American Capitalism 9

Returning to a More Honest America 10

Chapter 2 Scandals and More Scandals 13

Why We Didn't See This Coming 22

Chapter 3 Systematic Deception 25

What Was Going On? 26

Corrupt Accounting 26

Restatements 27

CEOs Ask for Misrepresentation 28

Hiding Relative Importance 28

Just Like the Others 29

The Common Accounting Dodges 30

SEC Oversight 39

The Criminal Mind 40

Chapter 4 More Than a Few Bad Apples 43

A Lot of Dirty Little Piggies 43

Bad Actors but No Scandals 44

Few Prosecutions Doesn't Mean Few Violations 45

Investors Made Too Little, and CEOs Too Much 46

Changes in CEOs' Attitudes Led to a Decline in Investors' Trust 47

Business Isn't Only to Blame 47

Not a Great Depression

Yet 48

The American Economic System Is Not Broken 48

The Business System as a Whole Is Not Broken 49

Conflicts of Interest: The Core of the Problem in the Securities Industry 52

Awards for "the Best" in Corporate America 54

Part II Infectious Greed: Who Got the Money? 61

Chapter 5 Shareholders versus CEOs: The CEOs Make It Big 63

CEOs Made Fortunes without Building Companies 65

Aligning CEO and Investor Interests 65

Stock Options Begin to Dominate CEOs' Pay Packages 67

Behind the Executive Pay Explosion 71

Why Options Pay Off When Companies Don't 73

Stock Options and the Link to Performance 73

Shareholder-CEO Alignment in Tatters 77

Is Alignment of CEO and Shareholder Interests Possible? 78

Chapter 6 Osama Bin Andersen: The Role of the Accountants 81

Peer Review 83

Deceiving Investors Legally 84

An Insidious Dynamic Develops 85

Other Commercial Ventures 87

The "Integrated Audit" 88

Widespread but Not Ubiquitous 88

Part III The Failure of Checks and Balances 91

Chapter 7 Neither Prevent nor Punish 93

Rubber Stamps

Boards of Directors 94

Protection for Deception: The Role of the Attorneys 95

The Failure of the Regulators 97

What the Prosecutors, Courts, and the SEC Didn't Do 97

What the Fed Didn't Do 100

Chapter 8 Ordinary Business at the Banks 103

Conniving with Corporations to Deceive Investors 104

Greasing the CEO's Palm via IPO Allocations 107

Chapter 9 The Corruption of the Analysts 109

Use It or Lose It 111

May Day 112

Maybe 20 Percent Are Honest 113

What's Said Isn't What's Done 115

Actual and Potential Clients 115

The Language of Recommendations 117

Efforts at Reform 118

Independent Analysts 119

Praise (or Rebuke) for Pay 122

Stealth Marketing 123

Part IV Why It Happened 127

Chapter 10 The Temptation to Steal 129

The New Very Rich: CEOs 129

How CEOs Get Rich 130

The Ignorant CEO 134

So Strong a Temptation 136

The Crucial Importance of Leadership 136

The Courage to Speak Out 138

Chapter 11 The Ethics of the Gutter 141

Do What's Right: Why Ethics Are Very Important 141

What Are Ethics? 143

The Failure of Ethics Programs in Companies 144

The Decline of American Ethics and How it Happened 146

The "Push the Limits" Environment 149

Hamstringing Ethics in America 151

The Role of the Business Schools 153

Part V Reforms to Help Investors 159

Chapter 12 Ties, Belts, and Shoelaces: Changing Incentives for CEOs 161

What To Do about CEO Compensation 163

A Critical Change Needed in Federal Tax Law 165

Boards of Directors versus the CEO in Setting Pay Packages 165

The CEOnistas

A Parody 168

Chapter 13 Total Regulatory Reform 171

A System Full of Holes 172

Imperiling Investors by Keeping the SEC Weak 174

Strengthening Investor Protection via a Consolidated Agency 176

Letting Investors Leave the Market 177

Keeping Investors in the Market 178

Overuse and Abuse

the Gnomes of Norwalk 179

Chapter 14 Restraining the Imperial CEO 183

American CEOs Have Too Much Power for the Safety of American Investors 183

Proposals to Strengthen Corporate Boards 185

Increased Shareholder Activism 186

America's Imperial CEOs 188

The Danger of Ineffective Reforms 191

Power Struggle: What Will Happen with Governance Reforms if the Imperial CEO Retains His or Her Power 192

America's Leadership Paradigm Is Upside Down 194

We Don't Have to Have Imperial CEOs 195

Reining in the CEO 196

Part VI The Market's Role in a Solution 199

Chapter 15 Let the Market Choose 201

Limitations of the Market 201

Freeing the Market from Ideological Constraints 202

Trusting the Imperial CEO Again 203

Finding a Market Solution in the Not-for-Profit World 204

Relying on the Market to Reform the Securities Industry 205

Comments of Fed Chairman Alan Greenspan on the Corporate Financial Scandals 206

Chapter 16 Ethics Can Make the Market Work 211

Corporate Leadership's Role 212

Business Schools' New Role in Teaching Ethics 213

The Importance of Continuing Education about Ethics 217

Will Society Reinforce Courses in Ethics? 218

Part VII Getting Your Money Back 221

Chapter 17 Freezing and Seizing: A Direct Route to the CEO's Pocketbook 223

Three Routes to the Money 223

Getting the Company to Sue for You 224

Appropriate Limitations 224

Filing a Claim against Your Broker 225

Going Directly to the Courts 225

Can Investors Get the Law Enforced? 226

What Happened to Chainsaw Al 227

Proving that CEOs Were at Fault 227

Getting Money if You Win the Suit 230

Chapter 18 Getting Congress to Get it for You 233

Taking Money from Perpetrators and Giving It to Victims 233

Idle Redress

Excessive Legalism 236

Part VIII Protecting Yourself from New Dangers 241

Chapter 19 How Should I Invest? 243

A Tough Time for Investors 243

How to Invest 245

The Fundamentals of the Market: The Economic Environment 247

Deciding Whether the Market as a Whole Is Becoming Less Dangerous for Investors 248

Which Way Will the Market Go? 251

Special Considerations for Investing Pension Money 253

Chapter 20 Hedge Funds That Don't Hedge 255

The Next Big Thing

The Fund of Funds 255

Hedge Funds 257

Chapter 21 Do Investors Dare Return to the Market? 261

A Bear Market, Yes, But Not Only a Bear Market 261

Diagrammatic Summaries of CEO and Investor Conflict in the Securities Markets 263

The Temptation Remains 268

It's Still Going On 270

Reform, Justice, and Restitution 272

The Irony of the Investor as a Victim of American Capitalism 275

The Trembling Foundations of Wall Street 276

Sources of Investor Risk 278

American Investment Markets without Investors 279.

Notes:

Includes bibliographical references (pages 283-296) and index.

ISBN:

0131408046

OCLC:

52002277