[Jay] Rasulo was asked if he’d rather have five minutes with Federal Reserve Board chairman Janet Yellen or a five-year-old kid who’d just gone to a Disney park for the first time. “That’s an easy one — way too easy,” he said. “I’ve had a million of those conversations with kids and they’re all great. And they’re always honest, which is the best thing.” [CFO]
- Caleb Newquist
- August 18, 2011
Apple Insider reported yesterday that when Apple CFO Peter Oppenheimer was asked about Google’s acquisition of Motorola he reportedly said, “$12.5 billion is a lot of money.” Now, I don’t know anyone that would say, “$12.5 billion is pocket change,” or “I piss on $12.5 billion.” Not even the most ostentatious Russian oligarch would be so bold to laugh in the face of that sum of money.
Having said that, it appears the Wall St. Journal seems to think that Oppenheimer’s statement are akin to fighting words, as illustrated by the headline: “Apple CFO Snipes at Google’s Motorola Bid” which included the following:
Peter Oppenheimer, Apple’s CFO, took a shot at Google when asked about the company’s $12.5 billion bid for Motorola Mobility Holdings during a conference call with investors hosted by Gleacher & Company. Oppenheimer said that companies should invent their own technology rather than buy it from the outside, adding that “$12.5 billion is a lot of money,” according to a report from Apple Insider.
First of all, to look at Peter Oppenheimer you wouldn’t think he’s capable of “sniping.” Secondly, “snipe” is defined as “To make malicious, underhand remarks or attacks” according to Wiktionary. For example, if Oppenheimer had said something like, “Larry Page couldn’t get laid in a monkey whorehouse with a bag of bananas” or “Androids are the Yugos of the smartphone world,” those would qualify as snipes. They are malicious, underhanded and are attacks.
Conversely, “$12.5 billion is a lot of money” is not a snipe. It is a statement of a fact-ish. It is a lot of money. You could argue that it is Oppenheimer’s opinion but as posited above, very few would argue that it isn’t a lot of money. Is Google overpaying for Motorola? That’s the question Michael Hickins ultimately asks in his article but somehow the hook for this was that Apple’s CFO brings the same level of snark as the CEO.
- Going Concern News Desk
- December 7, 2023
Well it was nice while it lasted. According to the the fourth-quarter AICPA & CIMA […]
- September 7, 2010
A recent study, “Why Do CFOs Become Involved in Material Accounting Manipulations,” by researchers at the University of Pittsburgh and the University of Washington attempts to answer just this question. Their finding? Pressure from the companies’ CEOs, more than the possibility of financial gain, tends to drive the actions of crooked CFOs.
Of course, the researchers couldn’t actually divine the motivations that drove the CFOs who manipulated numbers. Instead, they reviewed a group of firms subject to SEC enforcement, analyzing the role of the CFOs, as well as the costs they incurred and any benefits they gained from their actions.
They found – not surprisingly – that the CFOs involved faced stiff penalties for their actions. More than half of the CFOs (54 percent) employed by the nearly 300 firms in the sample that were charged by the SEC for accounting manipulation were prohibited from serving as an officer, director or accountant with a public company in the future. About 48 percent of CFOs were fined as a result of their wrongdoing, with a median fine of $50,000. A small number – about 4 percent – also faced criminal charges. Clearly, monkeying with the numbers can be quite costly for CFOs.
On the other hand, the CFOs that engaged shady number crunching didn’t have significantly higher equity incentives than CFOs in the control sample. That means the CFOs involved in misstatements took on a lot of risk, yet couldn’t expect to come out much further ahead financially than their counterparts at law-abiding firms.
Conversely, the CEOs of firms in trouble exhibited both greater power and equity incentive than CEOs of control firms. For instance, these CEOs were more likely to be company founders and to serve as chair of their boards than the heads of the other firms. “This evidence is also consistent with the pressured CFO explanation; that material accounting manipulations are more likely in the presence of powerful CEOs,” the researchers write.
What’s more, CFO turnover jumped during the three years before the misstatements occurred. That suggests that at least some CFOs either left or lost their jobs because they refused to participate in the manipulation.
The SEC also seems to have taken note of the larger role that CEOs, rather than CFOs, typically played in the schemes. When the researchers examined 188 companies in which both the CFO and CEO were charged with manipulating numbers, they found that the SEC had charged 18 percent of CFOs with orchestrating the schemes. When it came to CEOs, however, 32 percent were charged – almost double the CFO number.
Moreover, when the SEC charged just the CFO with wrongdoing, 30 percent of them benefited financially. That’s a lot, but it’s significantly less than the 46 percent of CEOs who were charged and also gained financially.
Given these findings, are there changes that could reduce accounting shenanigans? To be sure, the research doesn’t mean that CFOs who cook the books can simply blame their actions on their bosses; clearly they could have acted differently, as difficult as doing so might have been. The findings do suggest, however, that one step to reducing the opportunity for wrongdoing would be to provide CFOs with greater independence from their CEOs. One way to accomplish this would be to expect greater participation from corporate boards or audit committees when it comes to hiring and evaluating their firms’ chief financial officers.