Rating: 
Summary: Instructive, smooth read, but not for the casual investor
Review: NOTE: You are viewing the original version of the book (published in 1993). Schilit released a new edition in March 2002, which you can also find on Amazon.Over the past decade, Howard Schilit has built a reputation as a financial statement bloodhound through his organization, Center for Financial Research and Analysis (CFRA). His focus is on rooting out elements of public company financial reports that lessen the quality of reported earnings. Financial Shenanigans was originally published in 1993, though it remains as relevant today as it was then (maybe more so). Some may accuse Schilit of glossing over the details of the specific situations and companies used to illustrate his concepts. However, that is the hidden beauty of the book. Peeling back the layers of the financials to uncover fundamental weakness before it hits the stock is not a simple task. I think Schilit does an admirable job of keeping the discussion focused and relevant, without losing the reader in too many details that aren't germane to the topic at hand. Primary topics discussed center around three areas: "aggressive" accounting (recognizing revenue too soon or delaying recognition of expenses), "conservative" accounting (delaying revenue recognition or front-loading expenses), and other misleading elements of financial statements (nonoperating items, misleading disclosure of liabilities). After a clearly worded explanation of the concept, Schilit then illustrates each breach of reporting with real-world examples. He also provides a useful (but certainly not comprehensive) tutorial at the back which explains very basic accounting concepts - I would read it first and then tackle the main chapters. I think this book is most appropriate for investors who manage their own portfolios and spend serious time investing in (or shorting) stocks. It is not for those whose primary investment vehicles are 401(k) accounts or mutual funds and who casually buy a stock or two just to keep life interesting. Shenanigans is a good next step to investing in stocks after you have worked through the basic principles espoused in texts such as Peter Lynch's "One Up on Wall Street" or one of the Buffett books. As an investment professional, I can attest to the validity of the tools taught in this book, and I wholeheartedly recommend it to those investors who are serious about building - and protecting - their investments in the stock market.
Rating:
Summary: Instructive, smooth read, but not for the casual investor
Review: Over the past decade, Howard Schilit has built a reputation as a financial statement bloodhound through his organization, Center for Financial Research and Analysis (CFRA). His focus is on rooting out elements of public company financial reports that lessen the quality of reported earnings. Financial Shenanigans was originally published in 1993 and much of the discussion in that book is reprinted in the current edition (with more contemporary examples to support the concepts presented). Some may accuse Schilit of glossing over the details of the specific situations and companies used to illustrate his concepts. However, that is the hidden beauty of the book. Peeling back the layers of the financials to uncover fundamental weakness before it hits the stock is not a simple task. I think Schilit does an admirable job of keeping the discussion focused and relevant, without losing the reader in too many details that aren't germane to the topic at hand. Primary topics discussed center around three areas: "aggressive" accounting (recognizing revenue too soon or delaying recognition of expenses), "conservative" accounting (delaying revenue recognition or front-loading expenses), and other misleading elements of financial statements (nonoperating items, misleading disclosure of liabilities). After a clearly worded explanation of the concept, Schilit then illustrates each breach of reporting with real-world examples. He also provides a useful (but certainly not comprehensive) tutorial at the back which explains very basic accounting concepts - I would read it first and then tackle the main chapters. I think this book is most appropriate for investors who manage their own portfolios and spend serious time investing in (or shorting) stocks. It is not for those whose primary investment vehicles are 401(k) accounts or mutual funds and who casually buy a stock or two just to keep life interesting. Shenanigans is a good next step to investing in stocks after you have worked through the basic principles espoused in texts such as Peter Lynch's "One Up on Wall Street" or one of the Buffett books. As an investment professional, I can attest to the validity of the tools taught in this book, and I wholeheartedly recommend it to those investors who are serious about building - and protecting - their investments in the stock market.
Rating:
Summary: Great measures for making better company evaluations
Review: Regardless of how you feel about the stakeholder debate, it is clear that the management teams of publicly traded corporations have many obligations to the owners (who are the shareholders) of the company. Two of those obligations involve financial statements. First is to report an accurate picture of the financial state of the firm - which argues for conservative accounting. Second is to maximize the share price - which argues for more aggressive accounting because higher reported earnings tend to produce higher share prices. These contrary pressures create differnt outcomes in different firms and investors need to be aware at what is happening at their firm. This wonderfully informative book shows us how to understand financial reporting so we can determine if a given company is using conservative, aggressive, or even fraudulent accounting. I found it fun to read about the cases of shenanigans and how they were perpetrated and exposed. I also found it informative to learn about the gradations of shenanigans from aggressive reporting to outright fraud. It seems to me that most people who want to put their hard earned savings into equity investments would do well to educate themselves at least a little to the potential pitfalls that occur when a management team is willing to break their trust with investors. It has been pointed out by others that many folks put more time and analysis into buying a refrigerator or a lawnmower than in their retirement investments. When you think about it that way, the misplaced priorities of some investors become clear. Dr. Schilit has a lively writing style that keeps things from bogging down. This book isn't a hard read and can help the average investor understand more about what companies can and have done to basically phony up what they report to investors. Much of it is NOT illegal, but aggressive corporate behavior and reporting has too often led to disaster for investors. If you can clearly see which companies use aggressive accounting and which are conservative, you can better decide if you want to take on the risk associated with the aggressive accounting and the management style it represents. Maybe it is worth it, maybe it isn't, but at least you can decide for yourself rather than being in the dark. The author takes us through seven shenanigans that show up over and over again and more than two-dozen techniques that have been used to accomplish them. Many of the examples included are from well-known companies you may be doing business with today. He also has some helpful information on how to do vertical and horizontal analysis of financial statements in order to find the early warning signs that something might be amiss. The book culminates in an extended analysis of the financials of a famous case of Shenanigans: Miniscribe - the late maker of hard drives. And if you don't know anything about reading financial statements, there is a very helpful appendix giving you the basics of reading them and what they can and cannot help you see. Dr. Schilit also provides a list of online resources (only one of which is his own) that can help you do research on potential investments. He also provides key phrases (indicating danger) to search for in annual reports. No, this book will not make you a forensic accountant. But, yes, you will be more informed after having read it and that will help you make more informed decisions. Of course you can still make bad investment decisions, but they will likely have somewhat more reasoning behind them and maybe you can make fewer of them. I personally agree with the author that being aware of aggressive accounting practices is a kind of early warning system for the more serious problems that follow on all too often and always at shareholder expense. This book is worth the investment of your dollars and time in order to avoid the kinds of losses associated with companies that choose to misrepresent their actual financial condition to their shareholders. Note the headlines recently about Royal Dutch Shell Oil and its accounting reserves and earnings. The book does have a couple of minor typos, but they don't change the story much. They are usually easy to see and to adjust for in your reading of the example at hand. Yes, it would have been nice to not have them and I hope they catch them in a future printing. There is also a very useful index. Overall, a valuable book and a very fine job! It seems as if the positive reviews on this book are being given negative votes out of disagreement with liking the book rather than the review itself. I would be happy to receive emails from those of you who dislike the book so I can understand why.
Rating: 
Summary: An informative tool for any financial analyst
Review: Schilit does a great job putting some often overlooked and common financial practices into perspective as it relates to examining the quality of a company's financial reports. Many of the topics covered in the book are conceptually easy to understand and supported by real life examples.
Rating:
Summary: History Repeats Itself
Review: Schilit's Financial Shenanigans on the Enron debacle (Paragraph header, Page 109):
"Be wary of companies using subsidiaries for borrowing." Financial Shenanigans covers a tremendous amount of ground in 200 pages, at the expense of some detail. However, financial analysts don't use calculus. This very extensive collection of stories and accounting tricks provides a great conceptual framework for all financial analysis--this is "required reading", along with Thornton O'Glove's Quality of Earnings.
Rating: 
Summary: Great Idea, But Not Very Filling.
Review: The concept is obviously worthwhile, but this book is not nearly as useful as it might be. What's most annoying about "Financial Shenanigans" is the author's habit of showing a large graph of a stock's price at the time a particular shenanigan is detected by the investing public (can you say "book filler shenanigan"?), instead of providing an illustration from an actual financial statement. The author has a sloppy inclination for sketchiness and over-generalization when the subject cries for careful detail. "Financial Warnings" by Charles Mulford, is quite a bit more methodical and clear, even for the novice forensic accountant.
Rating:
Summary: Great measures for making better company evaluations
Review: The management teams of publicly traded corporations have many obligations to the owners (who are the shareholders) of the company. Two of those obligations involve financial statements. First is to report an accurate picture of the financial state of the firm - which argues for conservative accounting. Second is to maximize the share price - which argues for more aggressive accounting because higher reported earnings tend to produce higher share prices. These contrary pressures create differnt outcomes in different firms and investors need to be aware at what is happening at their firm. This wonderfully informative book shows us how to understand financial reporting so we can determine if a given company is using conservative, aggressive, or even fraudulent accounting. I found it fun to read about the cases of shenanigans and how they were perpetrated and exposed. I also found it informative to learn about the gradations of shenanigans from aggressive reporting to outright fraud. It seems to me that most people who want to put their hard earned savings into equity investments would do well to educate themselves at least a little to the potential pitfalls that occur when a management team is willing to break their trust with investors. It has been pointed out by others that many folks put more time and analysis into buying a refrigerator or a lawnmower than in their retirement investments. When you think about it that way, the misplaced priorities of some investors become clear. Dr. Schilit has a lively writing style that keeps things from bogging down. This book isn't a hard read and can help the average investor understand more about what companies can and have done to basically phony up what they report to investors. Much of it is NOT illegal, but aggressive corporate behavior and reporting has too often led to disaster for investors. If you can clearly see which companies use aggressive accounting and which are conservative, you can better decide if you want to take on the risk associated with the aggressive accounting and the management style it represents. Maybe it is worth it, maybe it isn't, but at least you can decide for yourself rather than being in the dark. The author takes us through seven shenanigans that show up over and over again and more than two-dozen techniques that have been used to accomplish them. Many of the examples included are from well-known companies you may be doing business with today. He also has some helpful information on how to do vertical and horizontal analysis of financial statements in order to find the early warning signs that something might be amiss. The book culminates in an extended analysis of the financials of a famous case of Shenanigans: Miniscribe - the late maker of hard drives. And if you don't know anything about reading financial statements, there is a very helpful appendix giving you the basics of reading them and what they can and cannot help you see. Dr. Schilit also provides a list of online resources (only one of which is his own) that can help you do research on potential investments. He also provides key phrases (indicating danger) to search for in annual reports. No, this book will not make you a forensic accountant. But, yes, you will be more informed after having read it and that will help you make more informed decisions. Of course you can still make bad investment decisions, but they will likely have somewhat more reasoning behind them and maybe you can make fewer of them. I personally agree with the author that being aware of aggressive accounting practices is a kind of early warning system for the more serious problems that follow on all too often and always at shareholder expense. This book is worth the investment of your dollars and time in order to avoid the kinds of losses associated with companies that choose to misrepresent their actual financial condition to their shareholders. Note the headlines recently about Royal Dutch Shell Oil and its accounting reserves and earnings. The book does have a couple of minor typos, but they don't change the story much. They are usually easy to see and to adjust for in your reading of the example at hand. Yes, it would have been nice to not have them and I hope they catch them in a future printing. There is also a very useful index. Overall, a valuable book and a very fine job! It seems as if the positive reviews on this book are being given negative votes out of disagreement with liking the book rather than the review itself. I would be happy to receive emails from those of you who dislike the book so I can understand why.
Rating:
Summary: Great measures for making better company evaluations
Review: The management teams of publicly traded corporations have many obligations to the owners of the company, the shareholders. Two of those obligations involve financial statements. One is to report an accurate picture of the financial state of the firm - which argues for conservative accounting. The other is to maximize the share price - which argues for more aggressive accounting because higher reported earnings tend to produce higher share prices.
This wonderfully informative book shows us how to understand financial reporting more completely so we can determine if a given company is using conservative, aggressive, or even fraudulent account. I found it fun to read about the cases of shenanigans and how they were perpetrated and exposed. I also found it information to learn about the gradations of shenanigans from aggressive reporting to outright fraud. I also enjoyed the book because Dr. Schilit has a lively writing style that keeps things from bogging down.
It seems to me that most people who want to put their hard earned savings into equity investments would do well to educate themselves at least a little to the potential pitfalls when management is willing to do break their trust with and duty to investors. It has been pointed out by others that many folks put more time and analysis into buying a refrigerator or a lawnmower than in their retirement investments. When you think about it that way, the misplaced priorities of some investors become clear.
This book isn't a hard read and can help the average investor understand more about what companies can and have done to basically phony up what they report to investors. Much of it is NOT illegal, but aggressive corporate behavior and reporting has often led to disaster for investors. If you can clearly see which companies use aggressive accounting and which are conservative, you can better decide if you want to take on the risk associated with the aggressive accounting and the management style it represents. Maybe it is worth it, maybe it isn't, but at least you can decide for yourself rather than being in the dark.
The author takes us through seven shenanigans that show up over and over again and more than two-dozen techniques that have been used to accomplish them. Many of the examples included are from well-known companies you may be doing business with today. He also has some helpful information on how to do vertical and horizontal analysis of financial statements in order to find the early warning signs that something might be amiss. The book culminates in an extended analysis of the financials of a famous case of Shenanigans: Miniscribe - the late maker of hard drives.
And if you don't know anything about reading financial statements, there is a very helpful appendix giving you the basics of reading them and what they can and cannot help you see.
He also provides a list of online resources (only one of which is his own) that can help you do research on potential investments. He also provides key phrases (indicating danger) to search for in annual reports.
No, this book will not make you a forensic accountant. But, yes, you will be more informed after having read it and that will help you make more informed decisions. Of course you can still make bad investment decisions, but they will likely have somewhat more reasoning behind them and maybe you can make fewer of them.
I personally agree with the author that being aware of aggressive accounting practices is a kind of early warning system for the more serious problems that follow on all too often and always at shareholder expense. This book is worth the investment of your dollars and time in order to avoid the kinds of losses associated with companies that choose to misrepresent their actual financial condition to their shareholders.
The book does have a couple of minor typos, but they don't change the story much. They are usually easy to see and adjust for in your reading of the example at hand. Yes, it would have been nice to not have them and I hope they catch them in a future printing. There is also a very useful index. Overall, a valuable book and a very fine job!
Rating:
Summary: An easy to read accounting book? Somehow it's true!
Review: This accounting book covers everything we wished we learned in our introductory accounting class, namely "How do we know if the managers are lying to us?"
In a very easy to read format, the book groups accounting tricks into seven major accounting shennanigans and then cross-references them to a variety of accounting scandals. In the end, you're left with a deeper understanding of the major ways people can manipulate financial statements for their own game.
This is a surprising interesting book given how dull most accounting texts are. It's appropriate for novice investors and accounting students as well as more advanced accountants. The book practically reads itself.
Rating:
Summary: An easy to read accounting book? Ye gods, it's true!
Review: This accounting book covers everything we wished we learned in our introductory accounting class, namely "How do we know if the managers are lying to us?" In a very easy to read format, the book groups accounting tricks into seven major accounting shennanigans and then cross-references them to a variety of accounting scandals. In the end, you're left with a deeper understanding of the major ways people can manipulate financial statements for their own game. A surprising interesting book given how dull most accounting texts are. It practically reads itself.
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