This Shows Financial Reality Has No Place in Today’s Markets

Another Happy Day for Destructive Accounting

The shares of OHL Mexico, the Mexican subsidiary of Spanish construction behemoth OHL, soared over 10% to 26.72 pesos on Monday morning. It was the stock’s biggest climb in over 8 months.

The reason for the market’s new-found enthusiasm for the shares was somewhat counter intuitive: the company had just announced that it had been hit by the biggest fine ever imposed by Mexico’s securities authority, the CNBV. The company had been penalized for irregular accounting practices and was forced to pay 71.7 million pesos in damages — a $4-million slap on the wrist.

“The market did not award the company, it awarded the fact that the fine was less drastic than it could have been,” said Juan Carlos Minero, director of the investment fund Black Wallstreet Capital.

Even more important than the size of the fine were the market’s fears that the company could be forced to change its accounting practices. Those fears were well grounded given that the CNBV had already unearthed a number of serious accounting irregularities dating back at least five years. Yet despite that, no mention has been made of OHL Mexico needing to correct its ways, to the market’s obvious delight

Continue reading the article at WOLF STREET

3 thoughts on “This Shows Financial Reality Has No Place in Today’s Markets

  1. Reblogged this on HISTÓRIA da POLÍTICA and commented:
    30/03/2016 por Don Quijones

    Outro dia feliz para Contabilidade Destructive
    As ações da OHL México, a filial mexicana da espanhola OHL construção gigante, subiu mais de 10% para 26,72 pesos na segunda-feira de manhã. Foi a maior subida do estoque em mais de 8 meses.

    A razão para o entusiasmo recém-descoberta do mercado de ações foi um pouco contra-intuitivo: a empresa tinha acabado de anunciar que tinha sido atingido pela maior multa alguma vez aplicada pela autoridade títulos do México, a CNBV. A empresa tinha sido penalizados por práticas contábeis irregulares e foi forçado a pagar 71,7 milhões de pesos em danos – um tapa US $ 4 milhões no pulso.

    “O mercado não concedeu a empresa, atribuiu o fato de que a multa foi menos drástica do que poderia ter sido”, disse Juan Carlos Minero, diretor do fundo de investimento Preto Wallstreet Capital.

    Ainda mais importante do que o tamanho da multa eram temores do mercado de que a empresa poderia ser forçado a mudar suas práticas contábeis. Esses temores foram bem fundamentada, dado que o CNBV já havia descoberto uma série de irregularidades contábeis graves que remonta, pelo menos, cinco anos. No entanto, apesar disso, nenhuma menção foi feita de OHL México a necessidade de corrigir os seus caminhos, para deleite óbvio do mercado …

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