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 they have the processes and people in place that can prevent or detect accounting errors. According to the Proskauer study, compare to
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