Wall St. likes financial statements that give it deep insights into a company’s operations, especially its liabilities. It likes boards that make sure shareholders get as complete a picture as possible of a firm’s balance sheet and details of its P&L, cash-flow, and other critical financial measurements.
24/7 Wall St. asked Audit Integrity to put together a list of companies traded on US exchanges with market caps of more than $3 billion that do particularly poorly in the areas of corporate governance, detailed disclosure of high-risk events including M&A and restructurings, revenue and expense recognition, and asset and liability valuation.
Based on the Audit Integrity model, 24/7 created a list of the twenty companies that Wall St. can trust the least. Among the companies that the analysis flagged are Altria (NYSE:MO), Chevron (NYSE:CVX), Credit Suisse (NYSE:CS), GE (NYSE:GE), Blackstone (NYSE:BX), Wal-Mart (NYSE:WMT), Wells Fargo (NYSE:WMT), and Dow Chemical (NYSE:DOW)
|Company||Ticker||AGR Rating||AGR Score|
|Altria Group, Inc.||MO||Very Aggressive||4|
|Chevron Corporation||CVX||Very Aggressive||4|
|Credit Suisse Group AG (ADR)||CS||Very Aggressive||4|
|General Electric Company||GE||Very Aggressive||4|
|Hologic, Inc.||HOLX||Very Aggressive||4|
|NASDAQ OMX Group, Inc.||NDAQ||Very Aggressive||4|
|PNC Financial Services||PNC||Very Aggressive||4|
|Teck Resources Limited||TCK.B||Very Aggressive||4|
|The Bank of New York Mellon Corporation||BK||Very Aggressive||4|
|The Blackstone Group L.P.||BX||Very Aggressive||4|
|The Dow Chemical Company||DOW||Very Aggressive||4|
|Wal-Mart Stores, Inc.||WMT||Very Aggressive||4|
|Wells Fargo & Company||WFC||Very Aggressive||4|
|Bank of America Corporation||BAC||Very Aggressive||8|
|Boston Scientific Corporation||BSX||Very Aggressive||8|
|Cephalon, Inc.||CEPH||Very Aggressive||8|
|KLA-Tencor Corporation||KLAC||Very Aggressive||8|
|Constellation Energy Group, Inc.||CEG||Very Aggressive||8|
|Fiserv, Inc.||FISV||Very Aggressive||8|
|The Western Union Company||WU||Very Aggressive||8|
Methodology: The Audit Integrity Accounting and Governance Risk (AGR®) rating is a forensic measurement of the transparency and reliability of a corporation’s financial reporting and governance practices. The focus of AGR analysis is on identifying the measures associated with fraud, and quantifying those risks for interested stakeholders to company stock prices, securities litigation, and major restatement probabilities.
Audit Integrity applies over 100 accounting and governance metrics to a company’s publicly-filed information. The resulting calculation produces the AGR, a percentile score ranging from 0 to 100, with corresponding ratings from Very Aggressive to Conservative.
Companies rated Very Aggressive or Aggressive have proven to be much more likely to face class action litigation and financial restatements, and to suffer severe equity loss. Conversely, those companies that have been consistently rated Conservative are considered the most trustworthy.
AGR significantly improves the predibility of traditional risk models.
The AGR and its underlying metrics are used by regulators, auditors, insurance companies, investment managers, and corporations, and are often incorporated in reporting by major financial media.
Douglas A. McIntyre