I want to supplement prior discussion at two points: First, Michael was kind enough to email me from the ether to call my attention to a post 2 days ago on Brad DeLong’s blog, at DeLong Post He discusses an experiment that tested smart people’s ability to make simple investment decisions. They do not do well. An article quoted concludes that most people cannot be trusted to invest their own money and should hire investment advisors. If so, one legal regime would require small investors to use an advisor, as current law does (or at least used to when I did these deals in practice) if they want to buy a private placement. Then, accountings could be written for investment advisors. Accounting reform still would be needed, as everybody getting snookered by Enron suggests.
My second supplement is to call your attention to an article in the current CFO magazine, which is available free online at CFO on GE The article goes into more detail about how GE and others measure customer satisfaction, which was discussed in an earlier post. The CFO article focuses on using the internet to communicate with customers to get easier, and therefor more, input.
Also, on the same page that is linked to above is a link to another article on CFO.com which talks about how CFOs should temper CEO’s optimism. Now they figure it out. (Remember that Fastow was Enron’s CFO.) It never will happen, sadly……