On this page we will keep track of reported episodes where firms have allegedly misstated earnings. Some involve manipulation, some involve fraud, some involve employee misconduct, and some simply involve mistakes.
The Chemours Company (Wall Street Journal, March 7, 2024)
An investigation by its audit committee found this Teflon maker delayed payments on payables and accelerated receipts from receivables in the fourth quarter of fiscal 2023 to meet cash flow targets on which stock and bonus awards for management were based. The investigation was sparked by an anonymous tip on the company’s ethics hotline.
China Evergrande Group (Wall Street Journal, March 19, 2024)
This troubled large real estate firm was fined the equivalent of about half a billion dollars by Chinese regulators for overstating revenue as it tried to get debt financing as it was failing. Sales were overstated by 564.1 billion yuan over two years, 2019 and 2020 by recognizing revenue in advance. In 2020, the overstatements made up 79% of reported operating income. It’s CEO, once one of the world’s richest men, was banned from the securities market for life. Evergrande defaulted on its debt and in January of 2024 and a Hong Kong Court ordered its liquidation.
Gloopen Group (https://www.sec.gov/newsroom/press-releases/2024-15)
In 2024, Gloopen Group, a Chinese supplier of cloud communication products and service settled with the SEC over a fraud scheme involving two managers who prematurely recognized revenue on contracts to meet sales targets. Gloopen had self-reported the fraud after an investigation and promptly took remedial action so no civil penalties were applied.
Macy’s. Inc. (https://www.usatoday.com/story/money/retail/2024/12/11/macys-employee-hidden-expenses-impact/76922398007/)
Macy’s, the U.S. department store chain reported in November 2024 that an employee with responsibility for accounting for small parcel deliveries had intentionally hidden between $132 million and $154 million in expenses. After an investigation, the firm said that the effect was not material and did not require restatement of financial reports. This drew some skepticism.