ipoI was reading the Techcrunch article about IPOs, where the following excerpt is mentioned:
The bar for readiness in the finance function is high for a public company. The company leadership needs to be able to forecast the business at a fine level. They also need to be able to accurately close the books in a very timely manner. The “accuracy” point is obvious — you desperately want to avoid the dreaded “restatement of earnings” that calls into question company competence.
Google gives me this:
Earnings restatements can be corrections in financial statements, but they can also help investors get a comparative sense of how a company is performing without a recently divested asset, with a change in accounting method, or with some other significant change in operations.
But, somehow no information about why they are considered dreadful or scary for an IPOing company.
Thus the question: Why is it considered dreadful?
Restating earning means you were not carefully managing and overseeing your cash. If you aren’t taking care of your cash, it calls into question how careful you are with everything else. My credit card number for example, my assets you hold, your ability to provide services I’m paying for or have pre-paid for. The list is endless and there are few good items on it.
All content is licensed under CC BY-SA 3.0.