I used to be a fundamental analysis investor. I'd analyze companies' financials like Ben Graham, Warren Buffett, Peter Lynch and use my MBA in Finance in determining fair valuations based on company financials. Then the dot com crash happened where every company recognized revenue early and gamed their losses into one-time non recurring goodwill write-offs. Every Chinese startup hired Big 4 firms to fabricate and validate non existent earnings. Every bank hid their liabilities in off balance sheet entities, wrote liar loans and used fictional mark-to-market valuations. I realized Big 4 accountants weren't about objective transparency, they were about lying and obfuscation.
Financial Shenanigans is the only book that exposes the most common accounting tricks used by large firms. It's well written and very readable if your into reading financial statements, which means it could be quite dry to the majority. It's structured into the most common shenanigan groups and how to detect them. Written in 2002 during a period of heightened awareness for reporting fraud, I'd love to see an update since it seems like we're in a newer multi-national age of revenue exaggeration and hidden liability tricks.
I still analyze financials but I've become more adept at spotting financial stories that don't make sense and staying away or trading the contrarian view, thanks to this book.
This review is the subjective opinion of an Investimonials member and not of Investimonials LLC
Was this review helpful?