Bubbly? Shares Surge For Companies With Weak Accounting Systems

The share prices of nearly 32 companies – from GrubHub to GoPro — that reported material weaknesses in their accounting systems last year have surged by an average of 42% since their stock debuts, reveals a Proskauer Rose study. The study from the New York law firm found that about 30% of companies that went public last year acknowledged that they were at serious risk of incorrectly reporting their financial information. Investors’ risk-taking mindset overlooks key metrics Ever since the passage of the Sarbanes-Oxley Act in 2002, companies are required to report material weaknesses, with public companies required to satisfy their auditors that…