Do listed companies do accounting frauds?

Some companies do accounting profit to inflate profit and siphon money for their personal use. There are multiple ways to do frauds, ranging from doing related party transaction, inflating cash in the bank accounts, inflating inventory and more.

Probably the business leaders are overtaken by greed. Else, why would they destroy the valuable company they created from scratch? Often, the people who end up losing are the shareholders, especially the retail investors.

How can investors identify such companies?

Before answering that do the investors really want to stay away from such companies? They are mostly looking to maximise their returns by leaps and bounds. We focus a little on the company’s underlying strength or weaknesses.

The best way to identify these companies is to read and read and read about those companies which have failed the shareholders in the past. It will show the ways taken up by the companies. Just to remind you, “History doesn’t repeat itself, but it often rhymes.”

You can read about Satyam, Quess Corp, 8K Miles and many more