The accounting research firm, GMT Research

Lisa Mangkornkarn

The accounting research firm

GMT Research

GMT Research provides independent insight into markets, sectors and companies throughout Asia. Our unique method of mining a comprehensive collection of corporate financial statements for key data allows us to evaluate the financial health of a company, sectors and the market at large. We also investigate the application of accounting standards by companies and sectors, shedding light on the quality of reported profits. Armed with this information, we help investment professionals navigate the financial landscape.

Thematic (Sector/Industry)

<p>It’s not just because Hong Kong allows short-selling that there are so many short-sellers’ reports, it’s because (by our estimates) Hong Kong is the corporate fraud capital of the world. A small but meaningful percentage of mainland companies seem predisposed to defrauding investors. In general, the sellside is not incentivised to uncover these frauds while auditors and regulators have been unsuccessful in spotting them. Meanwhile, as an accounting research firm, GMT Research is able to detect companies we suspect of being fake cash flow frauds but cannot definitely prove it. Given the expense involved in researching and uncovering frauds, short-sellers are best positioned to expose them. Let’s hope the regulator regards short-sellers as an asset and not a threat given that there seems to be a worrying temptation to shoot the messenger.</p>

It’s not just because Hong Kong allows short-selling that there are so many short-sellers’ reports, it’s because (by our estimates) Hong Kong is the corporate fraud capital of the world. A small but meaningful percentage of mainland companies seem predisposed to defrauding investors. In general, the sellside is not incentivised to uncover these frauds while auditors and regulators have been unsuccessful in spotting them. Meanwhile, as an accounting research firm, GMT Research is able to detect companies we suspect of being fake cash flow frauds but cannot definitely prove it. Given the expense involved in researching and uncovering frauds, short-sellers are best positioned to expose them. Let’s hope the regulator regards short-sellers as an asset and not a threat given that there seems to be a worrying temptation to shoot the messenger.

Hong Kong Needs Short-Sellers