The Ethics of Leveraged Management Buyouts Revisited

Author(s): Thomas M. Jones and Reed O. Hunt, III

Source: Journal of Business Ethics , Nov., 1991, Vol. 10, No. 11 (Nov., 1991), pp. 833-840
Published by: Springer

Stable URL: https://www.jstor.org/stable/25072222

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The Ethics of Leveraged Management
Buyouts Revisited
ABSTRACT. Although previous ethical analyses of manage
ment buyouts have presented useful insights, they have been
flawed in three major ways. First, they define the transaction
too narrowly, emphasizing the "going private" aspect and
ignoring the "leveraged" aspect. Leveraging alters the nature
of the transaction substantially and warrants additional
ethical analysis. Second, these previous analyses ignore the
impact of buyouts on non-stockholder constituents of the
firm, an omission which renders their implicit utilitarian
approach incomplete. Third, these analyses do not include
Rawlsian, libertarian, or Kantian perspectives on ethics. This
paper addresses these shortcomings and finds the ethical
status of leveraged management buyouts to be highly
suspect.
Leveraged buyouts (LBO's) have become a promi
nent feature of the economic landscape. In 1980, $3
billion worth of LBO's were undertaken; by 1988,
the total had reached $64 billion (Sherrid, 1989).
Their effect on the economy and the social fabric is
surely substantial. LBO's often result in great in
creases of wealth for managers, significant increases
of wealth of shareholders, and losses for other
Thomas M.Jones is a Professor of Organization and Environment in
the School of Business Administration at the University of Wash
ington in Seattle. He has written on such subjects as business
ethics, corporate social responsibility, corporate governance, boards
of directors, shareholder litigation, and business and society
paradigms. His work has appeared in the Academy of
Management Review, California Management Review,
Boston University Law Review and the Hastings Law
Journal.
Reed O. Hunt, III is currently working for the Seattle Office of
Peterson Consulting Limited Partnership, a national business
dispute resolution consultingfirm.
Journal of Business Ethics 10:833-840,1991.
? 1991 Kluwer Academic Publishers. Printed in the Netherlands.
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Thomas M. Jones
Reed O. Hunt, III
corporate constituents such as employees or bond
holders. For these distributive reasons alone, the
ethics of LBO's has become a topic of much debate,
both in the academic literature (Houston and Howe,
1987; Bruner and Paine, 1988) and in the business
press (e.g., Stein, 1985). This paper examines previous
ethical analyses of certain types of LBO's, finds them
flawed, and proposes an alternative ethical perspec
tive.
LBO's, MBO's, LMBO's and GPT's
Like the merger and acquisition phenomenon, the
LBO phenomenon has spawned its own distinctive
jargon, albeit one dominated by acronyms. A short
list of definitions will help resolve some conceptual
ambiguities and will facilitate the placing of bounda
ries on this analysis:
GPT ("Going Private Transaction") a transaction
which transforms a publicly traded firm to
a firm which is privately owned (Houston
and Howe, 1987);
LBO ("Leveraged Buyout") a GPT in which the
funds for the purchase are largely obtained
through the issuance of debt, often "junk
bonds";
MBO ("Management Buyout") a GPT in which
the buyers are dominated by corporate
insiders;
LMBO ("Leveraged Management Buyout") a
GPT financed by debt and led by corpo
rate insiders.
This analysis will focus largely on the last of these
categories, leveraged management buyouts, because
they are very common and present the most inter
esting ethical issues.
 834 Thomas M.Jones and Reed O. Hunt
The genesis and nature of LMBO's
LMBO's typically originate with a judgment on the
part of managers, usually in conjunction with (and
often at the prodding of) investment bankers, that
the firm's assets are undervalued. Undervaluation is
often found since firms frequently carry assets at
their book value as opposed to market value. In
many cases, the assets can be sold on the market for
much more than their book value. Thus manage
ment, along with its investment bankers and attor
neys, devises a plan to buy the firm back from its
public shareholders. The plan often includes the
raising of substantial amounts of debt financing
through the issue of high risk, high interest bonds,
the sale of which is handled by the investment
bankers. Because these bonds do not meet the stand
ards of investment grade bonds, as measured by
Moody's or Standard and Poor's bond rating indices,
they are termed "junk bonds."
In some cases, management may attempt to
temporarily depress earning by: (l) making real
expenditures, perhaps on relatively liquid assets such
as real estate which can be readily sold once the
buyout is completed; or (2) creating intangible
charges such as new depreciation costs or reserves for
various contingencies (Stein, 1987). The purpose of
these financial maneuvers is to reduce the cost of the
buyout by lowering the stock price.
The offer itself includes a healthy premium for
stockholders to induce them to sell their shares.
Included are statements outlining the virtues of the
buyout plan, a fairness letter supplied by a brokerage
firm and an accounting report supplied by public
accountants. Since both the brokerage firm and the
accountants are in the employ of the managers, an
"unfair" judgment is highly unlikely. Stein (1986)
reports that in a recent deal, two brokerage firms
supplied fairness letters; one of them received
$750 000 with another $3.25 million to be paid if the
deal went through on the terms endorsed, the
second received $500 000 with an additional $2.5
million contingent on the consummation of the deal
as endorsed. Both firms admitted to looking only at
information supplied by their clients and to consult
ing no one outside the client firm.
The specific virtues of the buyout plan, men
tioned above, often include relief from: (1) the
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burden of regulation on public companies (Stein,
1985); and (2) market pressures to perform on a
quarterly basis, pressures which inhibit careful atten
tion to long range planning and share value en
hancement (Stein, 1986). Some of these prospectuses
claim that the market has not recognized the firm's
true value (Stein, 1985). In general, it is asserted that
untapped value can be realized through the buyout.
The true untapped value is not revealed, since the
difference between the untapped value and the price
paid to shareholders represents the managers' profit
on the deal.
In some cases, transactions such as LMBO's must
be approved by the board of directors and a share
holder vote. When the premium offered to share
holders is significant, shareholder approval usually
doesn't present a problem, since shareholders may be
anxious to reap their windfall. Directors, too, may
find it difficult to resist such an offer, since their
primary duty is to promote shareholder interests.
Further, as several authors have pointed out, direc
tors are rarely able to act independent of incumbent
managers (Mace, 1971; Nader et ah, 1975; Jones,
1979). In any case, directors are unlikely to possess
information as to the true value of the firm, since
they depend on managers for virtually all their
information on the firm. In cases in which even
these modest impediments ? board and shareholder
approval ? seem too great, the managers can simply
bypass the approval process and buy the shares
directly through a tender offer.
The term "leveraged" refers to the fact that
managers rarely put up much of their own money to
finance the purchase; their financial stake is lever
aged through debt, often the issuance of junk bonds.
Finance theory tells us that debt financing increases
the potential rewards of any investment but also
increases the risk since debt service represents a
burden on revenues. Debt financing, a well-accepted
means of financing investments in general, often
assumes gigantic proportions in LBO's, since large
amounts are financed through debt and interest rates
are high on junk bonds. In the recent buyout of RJR
Nabisco (an LBO not an LMBO) for $25 billion,
annual interest payments went from $600 million to
$2.85 billion, an amount that exceeds the firm's
operating income (Stein, 1988).
 Leveraged Management Buyouts 835
The ethics of LMBO's
Two pairs of scholars have recently examined the
ethics of management buyouts. Houston and Howe
(1987) examined the ethics of "going private" and
concluded that: (1) GPT's result in increased social
wealth; (2) no ethical rule exists for the division of
spoils between shareholders and managers; and (3)
ethical duties to non-shareholders will have to be
imposed by law if they are to be enforced at all.
Bruner and Paine (1988) argue that the ethical
soundness of MBO's rests on the establishment of a
fair price to shareholders and that a "synthetic"
buyout price can be the basis of a fair price.
The analysis presented here argues that both
Houston and Howe (1987) and Bruner and Paine
(1988) have limited their views of LMBO's and
hence overstated the ethical acceptability of this
practice. Specifically, these authors ignore the effect
of "leverage" on these transactions and understate or
ignore the impact of such buyouts on non-stock
holder constituents of the firm. Our analysis corrects
these and other defects of the previous analyses and
draws considerably less favorable conclusions re
garding the ethics of LMBO's. The following sec
tions discuss manipulation of corporate earnings,
valuation of the firm, leverage and risk, agency
theory applications, other stakeholders, and market
stability.
Manipulation of corporate earnings
In some LMBO's, firm earnings are apparently
manipulated downward prior to the bid in order to
reduce the buyout price to managers (Stein, 1987).
Manipulation of corporate earnings in general is
common practice among corporate managers (Bri
loff, 1981). In many cases, such manipulation is done
in order to smooth out earnings trends or to shift tax
liabilities from one year to another. Although these
practices may be ethically suspect, many are legal
and "generally accepted" by the accounting profes
sion.
When earnings manipulation is done in the
context of an LMBO, however, the ethical implica
tions become more grave. In "normal" manipulation
of earnings, various benefits to the corporation or its
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shareholders may be claimed legitimately. Share
prices may be enhanced by smoothly rising earnings;
taxes may be saved or deferred by shrewd declara
tion of some expenses or revenues. In the case of
LMBO's, however, the purpose of the manipulation
is to benefit managers, at the expense of stock
holders, a clear violation of fiduciary duties. In
ethical parlance, the motives of the decision makers
(managers) are more obviously self-interested. Thus,
in the case of earnings manipulation, LMBO's seem
to magnify the ethical implications of a common
practice in the corporate community.
Valuation of the firm
The valuation of the firm is critical to the success of
any LMBO. Untapped value is assumed; without it,
managers would not make an offer. The problem is
that managers know, with a substantial degree of
precision, what the firm would be worth if some or
all of its assets were sold off. Other market partici
pants lack this knowledge and cannot make as well
informed a bid for the firm. Thus managers have a
substantial advantage over other investors or poten
tial investors regarding the appropriate value of the
firm. Indeed, Stein (1985) has argued that the infor
mation held by managers is inside information, and
that by offering to buy shares in light of this infor
mation, managers violate securities laws prohibiting
insider trading. Stein (1985) also argues that man
agers violate disclosure rules of the securities laws
when they fail to reveal that the firm is worth
substantially more than the bid price.
In addition to these problems, management has
an inherent conflict of interest in any LMBO. On
the one hand, managers seek the lowest possible
price for the shares in their roles as buyers; on the
other, they should seek the highest price possible in
their roles as fiduciaries of the stockholders. If Stein's
(1987) figures are at all representative, managers tend
to err on the side of their own interests. In particular,
he cites returns ranging from 40 to 100 times the
equity investments of managers in the LMBO's of
Gibson Greetings, Anchor Hocking, Amsted Indus
tries, Metromedia and Kaiser Industries.
What is an appropriate valuation for the firm?
Houston and Howe (1987) claim that no specific
 836 Thomas M.Jones and Reed O. Hunt
sharing rule is provided by ethical theory. Indeed,
they state that managers' fiduciary duty is violated
only if the GPT reduces shareholder wealth. This
conclusion cannot be taken seriously. Under the
guidelines presented by these authors, management
could take all of the "going private premium" with
out violating a duty to avoid serving their own
interests at the expense of shareholders.
Bruner and Paine (1988) recognize that the con
flict of interest is inevitable in MBO's as well as in
other transactions between shareholders and man
agers. They also stress that the outright prohibition
of LBO's or management participation in them
(making them MBO's) is not advisable; shareholders
would be deprived of deals which would benefit
them. These authors conclude that a fair price is
essential to any ethically sound MBO. Their stand
ard of fairness is a "synthetic" buyout wherein the
fair price is established by estimating "the value that
shareholders could obtain if they synthesized the
buyout on their own." (Bruner and Paine, 1988, p.
100). This standard seems logical since one of the
compelling criticisms of LMBO's is that any actions
that could be undertaken after an LMBO ought to
be undertaken before (or instead of) the LMBO.
Management compliance with fiduciary duty and
standards of ethical behavior toward shareholders is
thus assured.
Although the authors offer two examples of
"radical restructuring along these lines," neither
firm, Colt Industries nor FMC Corporation, was
bought out by its management. Instead, in the case
of FMC, management borrowed heavily, paid a large
extraordinary dividend to stockholders, and gave
itself 7.9 million additional shares. This is hardly a
"Going Private Transaction (GPT)," although man
agement held nearly 22% of the shares after the deal
(Bruner and Paine, 1988). One suspects that few
LMBO's based on the "synthetic standard" price will
be undertaken, since the enormous returns to man
agers which inspire LMBO's would be largely elimi
nated.
Leverage and risk
As mentioned above, a principal attraction of lever
aged buyouts is the "leverage" feature; debt financing
may constitute over 90% of the purchase price.
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Management thus contributes as little as 10% or even
5% of the required capital. This feature of LMBO's is
not an ethical problem per se, but coupled with
information available only to managers as insiders, it
creates an ethically untenable situation.
The relationship of risk to return on investment is
well discussed in the finance literature. Normatively,
those who take larger risks may be entitled to larger
potential returns. Indeed, risk is often expressed in
terms of the range of possible returns. Investments
with wide ranges of possible returns, including
substantial losses in some cases, are deemed risky;
investments with small ranges of possible returns are
judged less risky. Debt financing, or leverage, in
creases risk, since debt service increases fixed claims
on revenues. Highly leveraged buyouts would seem
to be very risky investments and thus "deserving" of
high potential returns.
But are LMBO's that risky? Recall that managers
are best able to assess the firm's worth if its assets are
sold off separately. This knowledge is what precipi
tates the offer in the first place. Management knows
how much debt it can incur and still meet monthly
interest payments. Management also knows how
much of the debt taken on can be paid off quickly
through the sale of "undervalued" assets, thus reduc
ing its debt burden. In short, in the case of LMBO's,
the risk is substantially less than the risk associated
with similarly leveraged investments. It follows that
the often enormous returns to managers in LMBO's
are not warranted.
Agency theory
The relationship between stockholders and man
agers in large corporations is often represented as
one of agency. An agency relationship involves one
party (the agent) "acting for" a second party or group
of parties (the principals) (Mitnick, 1982). Financial
economists have made the definition less general.
According to Jensen and Smith, an agency rela
tionship is a "contract in which one or more persons
(the principals]) engage another person (the agent)
to take actions on behalf of the principal(s) which
involves the delegation of some decision making
authority to the agent" (1985, p. 96). The "agency
problem" arises since the agent may not act in the
principals' interests at all times. The problem occurs
 Leveraged Management Buyouts 837
because the goals of the principals and the agent
diverge or conflict and the principals cannot easily
verify the agent's actions (Eisenhardt, 1989).
Bruner and Paine (1988) hinge their qualified
defense of MBO's (they do not address the "leverage"
issue) on the inevitable existence of agency rela
tionships between stockholders and managers. The
inherent conflict of interest which arises in these
relationships is "impossible to eliminate . . . without
elimating the relationships that give rise to them,
and that would be too great a price to pay" (Bruner
and Paine, 1988, p. 94). This conclusion is a reason
able one; large firms could hardly be run by stock
holders themselves when stockholders are a large
and diverse group. Some conflict of interest must be
accepted.
Acceptance of the inevitability of agency relation
ships and their attendant conflicts of interest does
not justify the abuse of stockholder interests by
managers, however. Agency theory is descriptive, not
normative, theory; it purports to describe agency
relationships the way they are, not the way they
should be from an ethical perspective. Management
actions taken in pursuit of its own interest instead of
the interests of shareholders are not morally justified
simply because they are predicted to occur (fre
quently) by agency theory. Indeed, such actions can
only be seen as manifestations of ethical egoism, a
theory given scant support by moral philosophers.
Other stakeholders
Two articles which assess the ethics of Going Private
Transactions (GPT's) limit their discussions to the
going private transaction itself ? the buyout of
publicly held shares by management. Neither Bruner
and Paine (1988) nor Houston and Howe (1987)
address the issue of financing the buyout, and for
good reason. These authors concern themselves with
the allocation of spoils between shareholders and
managers as if no other corporate constituents
(stakeholders) existed. Is this assumption warranted
in the case of LMBO's? Recall that GPT's and
MBO's do not explicitly include "leverage" ? sub
stantial debt in the financing package. Where then is
the money to buy the firm's publicly held shares to
come from? In some cases, little or no debt may be
involved. Such cases are likely to be quite rare, how
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ever, since the sums needed to finance such transac
tions are often very large relative to the wealth of the
top managers. In most cases, the money comes from
the issuance of debt, usually large amounts of it and
often in the form of high interest, high risk "junk"
bonds.
The addition of junk bonds to the LMBO equa
tion complicates the ethical analysis considerably.
For example, the firm's pre-LMBO bondholders
may suffer substantial losses. Bonds are often pur
chased as a form of long term investment. Invest
ment grade corporate bonds are often seen as safe
means of locking in a steady income stream for
several years; they are low risk, relatively low return
investments. The lower the risk, the lower the
interest paid and vice versa. High grade bonds,
because they are deemed safest by bond rating
services, pay the lowest interest. Firms value high
ratings for their bonds because such ratings allow
them to pay lower interest rates.
Bond rating services use many factors to deter
mine a firm's bond ratings ? debt to equity ratio and
interest coverage ratio among them. When an
LMBO (or any LBO) takes place, these ratios are
changed radically for the worse. The firm's invest
ment grade bonds, since the interest rate on their
face value cannot change, drop in value to reflect the
increased risk. Thus pre-LMBO bondholders suffer
losses, perhaps substantial losses. When RJR Nabisco
was taken private, the value of its bonds dropped
approximately 15% in international bond markets
(Stein, 1988). Where leverage is part of the buyout
package, bondholders, legitimate stakeholders of the
firm, are almost certain to lose money.
The firm has other stakeholders as well. Bruner
and Paine (1988) do not discuss the impact of MBO's
on other stakeholders. Houston and Howe raise the
issue of "duties to non-shareholders" but conclude
that "considerable efficiency may be sacrificed" if the
corporation remains open to outside interests (1987,
p. 523). These "outside interests," however, must be
considered in any comprehensive ethical analysis of
GPT's of any kind.
Employees may suffer the loss of their jobs; layoffs
and plant closings are common features of GPT's.
Even those employees who retain their jobs often
suffer demoralization and psychological stress. Cus
tomers, suppliers and retired employees may suffer
as well. When entire divisions are sold off, the new
 838 Thomas M.Jones and Reed O. Hunt
owners may repudiate warranty claims, supply con
tracts and pension obligations. Even communities
may be hurt when plants are closed; their investment
in infrastructure ? e.g., roads, schools ? may be
wasted. Further, the incentive of communities to
invest in new infrastructure is lessened considerably
when a corporate facility's future is in doubt, as it is
when a GPT lurks on the horizon.
Precise measurement of the losses taken by non
shareholder corporate constituents is difficult to
provide. However, it is fair to say that an ethical
analysis that ignores the impact of LMBO's on non
shareholder corporate constituents is seriously defi
cient.
Impact on the Economy
The impact of LBO's in general, and LMBO's in
particular, on the economy as a whole is also subject
to much speculation. Many economists and politi
cians are worried about the debt load taken on by
major corporations after LBO's are consummated.
The risk is clear; firms with heavy debt require
substantial revenues to pay interest on their borrow
ing. While many firms are able to meet these obliga
tions during periods of general economic strength,
far fewer can weather economic downturns. If
economic conditions change for the worse, bond
defaults and corporate bankruptcies will surely
increase, leading to more deterioration of economic
conditions. Evidence is beginning to accumulate that
junk bond defaults are rising (Wall Street Journal,
April 14, 1989) and LBO's are beginning to fail
(Time, August 14, 1989; Newsweek, September 4,
1989). The danger is that heavily leveraged firms will
precipitate or exacerbate a recession.
LBO's also constitute a major causal element of
an increasingly speculative and volatile stock market.
Not only do the potential quick profits on individual
stocks subject to LBO's prompt much speculative
activity, but the market appears to react to perceived
changes in the prospects for LBO's in general. The
recent (October, 1989) precipitous decline in stock
prices has been attributed to concern that the failure
of the UAL (parent firm of United Air Lines) buyout
signalled an end to funds for LBO's in general (Sease,
1989); the Dow Jones Industrial Average dropped
190 points the day the announcement was made.
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This volatility, coupled with the spectre of top
managers becoming enormously rich in LMBO
transactions, probably contributes significantly to the
image and reality of what has been called a "casino"
society. The indirect economic and social impact of
LMBO's may be substantial.
Ethical theory and LMBO's
The theory which underlies any ethical justification
of LMBO's is utilitarianism. Simply put, LMBO's
increase both shareholder and managerial wealth.
The ethical allocation of this wealth increase is
judged either indeterminate (Houston and Howe,
1987) or subject to a "synthetic standard" (Bruner
and Paine, 1988). According to these authors, man
agement buyouts are acceptable or conditionally
acceptable from an ethical point of view. This paper
argues that the implicit utilitarian analyses of these
authors is incomplete and that other ethical stand
ards render LMBO's ethically suspect.
Act utilitarianism involves making decisions
which maximize the net utility of society as a whole,
not just the parties to the individual transaction. As
the above analysis makes clear, bondholders and
other non-shareholder constituents of the corpora
tion do not fare well in leveraged buyouts. Subtract
ing the losses of those stakeholders from the gains of
shareholders and managers would yield a legitimate
utilitarian assessment of these buyout transactions.
Further, as Bruner and Paine (1988) make clear,
only those buyout transactions which are based on a
"synthetic standard" price fulfill management's fidu
ciary duty to serve the stockholders' interest instead
of their own. No LMBO's have met this standard as
yet (to these authors' knowledge) and few are likely
to in the future, because it substantially reduces
management's incentive to go private. Thus 'it ap
pears that LMBO's fail the test of rule utilitarianism,
since fiduciary duties are rules intended to produce
utilitarian outcomes over the long term.
A libertarian standard of justice can also be
applied to LMBO's. Nozick (1974) advocates justice
in transfer of holdings, among other criteria, in his
"entitlements" theory of justice. Manipulation of
corporate earnings to reduce the buyout price, if it
occurs, surely fails this test. Further, although the
buyout of shareholdings is essentially voluntary, not
 Leveraged Management Buyouts 839
coercive, and hence would be judged "just" by
Nozick, the same cannot be said of the transaction's
effect on bondholders. This latter group of investors
is not free to choose whether or not it wants to incur
substantial losses; it is forced to accept them. Other
corporate constituents may be forced to give up their
holdings as well. Employees whose jobs are elimi
nated constitute one such group. The standard of
justice in transfer of holdings is not upheld; the
terms of libertarian justice are clearly violated.
Rawlsian justice, which regards justice for the
individual as paramount, endorses decisions with
egalitarian consequences. Decisions which result in
unequal benefits are morally acceptable only if
everyone, particularly those least well off, benefits in
some way (Rawls, 1971). Since bondholders and, in
many cases, employees and other corporate stake
holders are harmed by these transactions, Rawls'
standard is violated by LMBO's as well.
Kant's categorical imperative also offers standards
for judging the morality of business decisions. Kant
focuses on the reasons behind a decision rather than
the consequences of the decision itself. Of concern to
us here is his "reversibility" principle, which states
that a person's reasons for acting must be reasons
that he or she would be willing to have others use as
a basis for treating him or her were their roles
reversed; this is an approximation of the "Golden
Rule." Since managers would certainly not want
anyone to treat them the way that they treat bond
holders or company employees in LMBO's, Kant's
reversibility principle is violated. Further, Kant
stresses that people should be treated as ends, not
only as means. People should not be "manipulated,
deceived, or otherwise unwillingly exploited to
satisfy the self-interest of another," according to
Kant (Velasquez, 1982). Again, managers seem to be
exploiting bondholders and employees and manipu
lating and deceiving stockholders in their efforts to
take their firms private.
Since the managers' motives are the focus of
Kantian analysis, one should examine the apparent
motive for LMBO's. If managerial motives were
pure, the LMBO plan would contain several protec
tive clauses for company stakeholders. For example:
? the buyout price would be based on a "syn
thetic standard," which approximates "the
value shareholders could obtain if they syn
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thesized the buyout on their own" (Bruner
and Paine, 1988, p. 100);
? bondholders would be reimbursed for the loss
of value to their bonds (bonds could be
redeemed at face value or even with a "call
premium")' and
? employees would be assured of continued
employment or compensated fairly.
Since no LMBO to date has any of these features, it
is fair to conclude that managers are largely moti
vated by the desire to increase substantially their
own wealth as quickly as possible. These are not
noble motives; Kant would not approve.
Conclusions
Leveraged management buyouts have become com
mon occurrences in today's economy. On the sur
face, since they benefit both stockholders and man
agers, LMBO's seem ethically sound. Closer analysis
reveals several ethical problems, however, some of
which have been dealt with in previous articles by
other authors. This paper argues that previous
analyses are both incomplete in terms of the corpo
rate constituents that they consider and inappro
priately based on narrowly construed utilitarian
principles. When these defects are remedied, as this
paper attempts to do, the ethical status of LMBO's is
found to be highly suspect.
References
Briloff, A.: 1981, The Truth About Corporate Accounting
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