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 The Chink In Your MBA Armor
What They Didn't Teach You About Customer-Market Efficiency Can Leave Your Company Defenseless
by Laszlo I. Nemeth
Hardcover | March 2002 | $24.95
Barcourt Publishers; ISBN: 0967449030
News Angles
ENRON, Just the Tip of the Iceberg
Can Auditors Find the Truth?
Are Layoffs Good Medicine?
Can Corporate Financial Shenanigans be Stopped?
ENRON, Just the Tip of the Iceberg
ENRON and its auditing firm, Arthur Andersen, are under scrutiny, their practices questioned and are under investigation. Investors feel they were deceived. But ENRON's debacle is merely one symptom of a much more malignant problem.
Investors and managers often rely on accounting information to gauge the value and performance of a business. But, even under the best of circumstances this information can paint a picture very different from the true value and performance capability of a corporation.
To understand what really happens inside a business one must look past the financial reports, as a new book, The Chink in Your MBA Armor, by Laszlo I. Nemeth, recommends. Nemeth points out that traditional accounting methods foster bad decisions and invite unsavory practices on many levels of the company.
As a remedy, Nemeth recommends a view that is "180 degrees opposite" of traditional practice. Financial investors, executives and employees of corporations alike will gain valuable insights from his story.
Can Auditors Find the Truth?
The leading auditing firms, such as Arthur Andersen, typically hire the best and brightest MBAs from the top universities of the country. These students are trained to be the experts in verifying whether a company is run "by the book." Should this give comfort to investors and other consumers of their auditing reports?
Hardly, as a new book, The Chink in Your MBA Armor, by Laszlo I. Nemeth claims. According to the author, there is grave danger in gauging a company with accounting data and financial reports. Even the best students of accounting and finance are ill equipped to deal with the task of verifying the activities of corporate management.
As the book describes, the real drivers of business performance are not accounted for anywhere in the traditional reports and disclosures that auditors scrutinize. Whether executives employ monetary and other resources diligently to increase investor value cannot be ascertained from financial reports.
Aside from making deliberate distortions in the company's books, there are too many opportunities for executives to make decisions that will not favor the investors. Astute investors must understand the business and be able to scrutinize the decisions of executives before trusting money in their hands.
The Chink in Your MBA Armor provides the reader a unique insight into the real-life actions inside a corporation. It reveals why accounting data and financial reports are not reliable guides to evaluating a company's performance and future potential.
Are Layoffs Good Medicine?
It seems that every day there is a new announcement of drastic layoffs by yet another company. Could layoffs prove to be the wrong response by executives to shore up sagging profits in an economic downturn?
As a new book, The Chink in Your MBA Armor, by Laszlo I. Nemeth depicts, layoffs are often the wrong medicine for the company's ills. Layoffs are typically "knee-jerk" reactions to numbers in accounting and financial reports. But those reports are not telling the real story executives should consider before taking such drastic measures. The author recommends more thoughtful and savvy options to fix the company and prepare it for competition.
The book urges executives to recognize the true drivers of business performance before considering layoffs. Unfortunately, these drivers are not represented in the accounting data and financial reports. To help, Nemeth recommends a new perspective, from the angle of the customer market. That view is contrary to traditional practice. It reveals the true value of employees and questions the "savings" that might result from their layoff. At close scrutiny, layoffs might be the worst decision executives may make in an attempt to minimize losses.
Can Corporate Financial Shenanigans be Stopped?
In the wake of the ENRON fiasco the hue and cry about lack of oversight fills the news. Pundits and critics of corporate America are screaming for new regulations. Surely, something has to be done to protect employees' retirement funds. But, can increased accounting precision, disclosure and squeaky clean financial reporting solve the problem?
Not quite, according to a new book, The Chink in Your MBA Armor, by Laszlo I. Nemeth. As the author describes, a company's success and the honesty of its executives are not assured by accounting and financial reporting.
The book is written in a novel format, making the subject easily accessible even for laymen not steeped in accounting and financial expertise. The author provides ample reasons to doubt that financial disclosure will save investors from questionable executive decisions.
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Copyright 2001 Barcourt Publishing, Llc
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