World Herald
Investors Questioning Even Blue-Chip Firms

Investor confidence has been shaken by large corporate bankruptcies and news of accounting scandals. J. Randall Woolridge, a professor of finance at Pennsylvania State University, said Enron made people realize they can't look only at a company's earnings. He said investors also need to read corporate cash flow statements - detailing actual cash in and out while excluding noncash items such as depreciation and amortization. He said cash flow may reveal a company's accounting methods, expose whether it's getting paid for its services or goods, and suggest something about the quality of its earnings.

…During the bull market, said Ed Ketz, an accounting professor at Penn State, many company managers used accounting to drive financial results - to increase the company's stock value and, thus, the value of their stock options. For information on how to receive the full story, contact Steve Infanti in the Smeal College Media Relations' Office at smi3@psu.edu .

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REPORTERS & EDITORS: For more information, please contact Wyatt DuBois in the Smeal College of Business Media Relations Office at 814-863-3798 or wed112@psu.edu .

Penn State's Smeal College of Business offers highly ranked undergraduate, MBA, executive MBA, Ph.D., and executive education opportunities to more than 5,500 students at all levels. Featuring academic departments of accounting, finance, marketing, insurance and real estate, management, and supply chain and information systems, the college is also home to major research centers such as the Center for Supply Chain Research, the Institute for the Study of Business Markets, the eBusiness Research Center, the Farrell Center for Corporate Innovation and Entrepreneurship, the Center for Global Business Studies, and the Center for the Management of Technological and Organizational Change.

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