Paul Krugman has a preliminary taxonomy of large-scale corporate fraud. There’s the Enron, Dynegy, Adelphia and WorldCom for starters. “I’m not saying that all U.S. corporations are corrupt. But it’s clear that executives who want to be corrupt have faced few obstacles.”
A question I have about this … were the companies really covert and hiding this in a way which was impossible to see. Or were the “analysts” on Wall Street just not smart enough to understand what was going on?
I can see how auditors, banks etc. could be briberized into complicity by having a stake in the outcome, but what about independent analysts in the media, working for brokers etc?
I can’t believe you still use a term like “independent analyst”. Recent events have demonstrated conclusively, it seems to me, that sell-side analysts have been wholly in hock to the investment bank machines that want to generate fees — and that means staying in with companies to get the lucrative mandates.
The fees from analysis are trivial, if there are any at all. Institutional investors have their own analysts whose work isn’t public. They certainly don’t trust the sell-side opinions. So it isn’t bribery (and I doubt it was bribery as such with auditors, banks, etc), just greed and avarice.