Name: Financial Shenanigans
ISBN: 9781260117264

Financial Shenanigans

Techniques to uncover and avoid accounting frauds and scamsInflated profits... Suspicious write-offs... Shifted expenses... These and other dubious financial maneuvers have taken on a contemporary twist as companies pull out the stops in seeking to satisfy Wall Street. Financial Shenanigans pulls back the curtain on the current climate of accounting fraud. It presents tools that anyone who is potentially affected by misleading business valuations--from investors and lenders to managers and auditors--can use to research and read financial reports, and to identify early warning signs of a company's problems. A bestseller in its first edition, Financial Shenanigans has been thoroughly updated for today's marketplace. New chapters, data, and research reveal contemporary "shenanigans" that have been known to fool even veteran researchers.

What Hacker News says

shooApr 2026

Hindenburg Research is great. They also did the Nikola expose (that bunch of shysters who claimed to have electric truck technology where their truck couldn't even move under its own power so they filmed it rolling down a gentle slope).

For anyone wanting to get into the weeds about detecting accounting fraud, the book "Financial Shenanigans" has lots of historical examples of ways company executives have cooked the books to make their public company financial statements appear more appealing to investors than they actually are.

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metaphorSep 2022

> I've heard of companies bringing revenue forward but I've never heard of postponing revenue to a later quarter.

Schilit et al on Financial Shenanigans is instructive here.

Management might try playing this game to reach future bonuses staked to earnings targets.

Microsoft did it in the late 90s with unearned revenue reporting as a way to avoid bringing additional regulatory attention to their anti-competitive practices.

Enron did it in the early oughts using undisclosed reserve accounts to smooth income while manipulating the energy markets after landing huge windfall profits in its trading division to the tune of over $1 billion.

USRobotics did it when they merged with 3Com in 1997 by not booking over $600 million in revenue during a two-month stub period---instead reporting $15.2 million, compared to $690.2 million in the preceding quarter---for 3Com's benefit after the merger closed.

A few months ago, Broadcom announced plans to acquire VMware for ~$61 billion in cash and stock[1]. Speculating, suppose VMware were to pull a similar stunt into the merger, but rather than using it to conceal bad faith projections circa 2019, a variant of the 1997 USRobotics+3Com merger playbook were to pan out undetected.

There's a part of me that (perhaps naively) wants to believe this press release isn't really about some weak $8 million penalty, but a warning shot to both VMware and Broadcom that the SEC is watching very closely.

[1] https://www.broadcom.com/company/news/financial-releases/602...

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kriroJul 2022

Not quite what I expected, the recommendations are more high level. For a more "operational" perspective, I highly recommend "Financial Shenanigans" which covers different ways to manipulate financial statements. "Quality of Earnings" is a good complement to that.

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rudyfinkApr 2022

You might enjoy a book called Financial Shenanigans (https://www.amazon.com/Financial-Shenanigans-Fourth-Accounti...). It's essentially examples of detective stories based on financial statements.

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kriroMar 2022

[Accounting && Finance/Investing]

Not my current job, but understanding the basics of accounting was related to technical jobs I previously held (in ERP) and finance/investing is useful in general.

I'd highly recommend "The Accounting Game" for anyone that quickly wants to understand accounting basics (U.S. accounting) and how everything fits together. It basically walks you through being a child with a lemonade stand and doing the accounting for it. Similarly if you want a quick overview of some of the multiples and what they mean for finance/investing, I'd recommend "Visual Finance".

The most fascinating book that I've read in the accounting/finance domain is "Financial Shenanigans" which outline different ways to manipulate financial statements. It would be my recommended goto book for the field of financial fraud.

For personal investing, my goto is "Quantitative Value" which methodically walks through different value investment strategies and backtesting them. I think the overall recommendation of buying companies that have low acquisition costs relative to their operational profits is good and it's how I screen stuff I buy, but the general mindset and systematic approach is what makes this book very valuable. This is not a book that will "attract anyone" but I'm pretty sure it's the one investment book I'd recommend to an analytical/scientific kind of person which I'd say is what the HN crowd is for the most part.

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MattGaiserJun 2021

I have read and own the recommended book at the end, Financial Shenanigans. Anyone who has ever had to measure up to some imperfect KPI will find it relatable.

My way of personally looking for fraud is to look at incentives. What might this person stand to gain if I take this chosen action and do my incentives align in any way with his?

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