The Valuation Treadmill: How Securities Fraud Threatens the Integrity of Public Companies

Public companies are under pressure to meet investor expectations, leading to securities fraud as they issue unrealistically optimistic disclosure to convince markets of their success. Securities regulation must do more to protect the integrity of public companies.

Format: Paperback / softback
Length: 240 pages
Publication date: 28 July 2022
Publisher: Cambridge University Press

The pressure on public companies to meet investor expectations is immense, with the need for consistent and strong short-term performance to maintain their stock price. This valuation treadmill creates a perverse incentive for corporations to deceive investors. Despite the passage of Sarbanes-Oxley more than twenty years ago, which mandated investments in measures to ensure the accuracy of disclosures, The Valuation Treadmill demonstrates how securities fraud has become a major regulatory concern. The book, through case studies of paradigmatic securities enforcement actions involving Xerox, Penn Central, Apple, Enron, Citigroup, and General Electric, argues that corporate securities fraud emerged as investors increasingly valued companies based on their future performance. This has led corporations to issue unrealistically optimistic disclosure to convince markets that their success will continue. Securities regulation must do more to protect the integrity of public companies from the relentless pressure of the valuation treadmill.

Weight: 276g
ISBN-13: 9781108940412