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7. Cooking the Books: Corporate Earnings... > Mood-Driven “One Time” Charges

Mood-Driven “One Time” Charges

There are other elements of mood-related accounting that I believe investors should also consider. It is always interesting to me to see what “one-time” write-downs a new CEO or CFO takes in the quarter after assuming office, particularly when the executive comes in from the outside. When these charges happen, they almost always reflect a change in mood and typically a more cautious outlook by the incoming executive. (And as an aside, I have always been surprised that boards of directors don’t include compensation clawbacks for departing executives, as subsequent asset write-downs almost always relate to profits booked in prior periods.)

Changes in management are not the only time, though, when you can see corporate mood changes reflected in company accounting in real time.


  

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