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Pastimes : Ask Mohan about the Market

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To: IceShark who wrote (7031)	11/4/1997 10:12:00 PM
From: Mike M2	Read Replies (1) of 18056

Dan, I'm not sure if I have this right but I have a diary with brief notes sometimes too brief. ANYWAY Roger Lowenstein of WS Journal did a story on the options scam 6/26/97 . That is if my cryptic notes are correct. I do recall reading the story and it was shocking how distorted (overstated) the earnings were for some companies. If someone has WSJ interactive they can look it up. Dan is correct the use of options as a form of compensation understates the true employee compensation cost, companies take a tax break for a charge that does not show up on the income statement-it hits the balance sheet- equity acct. the end result is the true earnings power of companies is overstated. I clipped the article but i am not very organized but if I come across it I will post some gory details. In short the practice is deceptive and misleading. mike

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