A way to detect self-delusion and fraud in companies... from the outside?

[seawasp]

Take a look at this post and the discussion of Benford's Law. It looks at a very simple indicator -- the frequency of first digits in relevant data -- to see which industries appear to be generating unlikely data.

  Very interesting...

Comments

[k-kinnison.livejournal.com]

I know some CPA's. it is not the accountants that are frauds, but the managers who tell the accountants to cook the books to make numbers look better

My favorite example: If your profits double, that is a 100% gain, but if they go back down that is a 50% loss. even tho your "stock" ends up at the same price at the end.

Another corporate inconstancy is the example of a pig and chicken starting a Ham and eggs restaurant. Who do you think should have more say in how the business is run? the Chicken is a part of it, but not as committed as the pig. Yet today's corporations think that it is okay to fire the Pig for lack of performance, while giving a raise to the chicken for improving profits.

[scott-sanford.livejournal.com]

Yes, that caught my attention, too (which I expect you'll see when you re-visit Charlie's site). I really hope some forensic accountants are poking around under the metaphorical rocks; something with too many legs is living under there and hiding from the light.