Director | Exposing Creative Accounting, Bucephalus Research Partnership

Robert Medd

Director | Exposing Creative Accounting

Exposing Creative Accounting

Bucephalus Research Partnership

Bucephalus Research Partnership Limited. Exposing Creative Accounting.

At the Bucephalus Research Partnership (BRP) we analyse financial statements using our accountant's practical experience and our own quantitative algorithms for corporate governance, accounting risk and peer performance.

Our thematic research refines our unique algorithms while our single stock research focuses on examples where we discover a significant gap between published accounts and business reality.

​Bucephalus Research Partnership:
- Is an independent fee-based research service
- Does not take proprietary positions, long or short
- Does not solicit business or fees from the corporates we review

Forensic Accounting

<p>The accounting rules for equity compensation are deeply flawed. They obscure the true cost and imply there is no impact on cashflow. In reality, the true cost, and the cash impact, is often multiples of the accounting expense. Worse, it incentivises management to push short-term stock performance, irrespective of the risk to long term shareholders. We think “adjusted” EBITDA as a proxy for cash generation is grossly misleading, particularly if used with buybacks. As a valuation tool, by ignoring the real costs, it simply reinforces the cycle.</p>

The accounting rules for equity compensation are deeply flawed. They obscure the true cost and imply there is no impact on cashflow. In reality, the true cost, and the cash impact, is often multiples of the accounting expense. Worse, it incentivises management to push short-term stock performance, irrespective of the risk to long term shareholders. We think “adjusted” EBITDA as a proxy for cash generation is grossly misleading, particularly if used with buybacks. As a valuation tool, by ignoring the real costs, it simply reinforces the cycle.

Obscuring the True Cost of Management (North America)

Servicenow Inc

Obscuring the True Cost of Management (North America)