The Valuation Treadmill
How Securities Fraud Threatens the Integrity of Public Companies

This book analyzes paradigmatic securities frauds to show how market pressure to deliver short-term results incentivizes companies to deceive investors.

James J. Park (Author)

9781108940412, Cambridge University Press

Paperback / softback, published 28 July 2022

240 pages
22.8 x 15.1 x 1.1 cm, 0.3 kg

'The Valuation Treadmill is extremely well written, and will be in invaluable aid to young lawyers, not to mention more experienced attorneys, who may otherwise have difficulty understanding the concepts of public company valuation fraud. This book fills an important niche and is one every lawyer interested in securities fraud should read.' Harvey Pitt, CEO of Kalorama Partners, LLC

Public companies now face constant pressure to meet investor expectations. A company must continually deliver strong short-term performance every quarter to maintain its stock price. This valuation treadmill creates incentives for corporations to deceive investors. Published more than twenty years after the passage of Sarbanes-Oxley, which requires all public companies to invest in measures to ensure the accuracy of their disclosures, The Valuation Treadmill shows how securities fraud became a major regulatory concern. Drawing on case studies of paradigmatic securities enforcement actions involving Xerox, Penn Central, Apple, Enron, Citigroup, and General Electric, the book argues that corporate securities fraud emerged as investors increasingly valued companies based on their future performance. Corporations now have an incentive to issue unrealistically optimistic disclosure to convince markets that their success will continue. Securities regulation must do more to protect the integrity of public companies from the pressure of the valuation treadmill.

1. Introduction
2. Xerox and the Pressure to Meet Projections
3. Penn Central and the Decline of Managerialism
4. Apple and the Controversy of Projections Litigation
5. Enron and Sarbanes-Oxley
6. Citigroup and the Financial Crisis of 2008
7. General Electric and the Problem of Earnings Management
8. The Future of Securities Fraud Regulation
9. Conclusion
Notes.

Subject Areas: Company, commercial & competition law [LNC]