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2 replies to "Why Earnings Manipulation Is Highly Contagious"
What a great article! Thanks for the heads up on O&G.
Figure 1 is showing a divergence between market value and economic book value. Wonder if this could be a catalyst for an attempt to drive increased market value by elevating hidden gains, given that the divergence could create angst (uncertainty). Again, thanks for the article.
Another thought…Economic book value (EBV) basically flattening after peaking in 2012. Headwinds on WACC component of EBV if rates increase (noted if increase is slow, WACC increases slowly over time). Still a headwind that is exacerbated by a period of cost/labor-expense cutting that is coming to and end and will no longer be a lever to pull to drive EBV upwards. Companies will now need to invest and try to drive revenue through those investments and increased marketing for longer-term EBV growth, IMHO.