Stocks with Questionable Management Integrity Identified
Audit Integrity has identified University of Phoenix owner Apollo Group, Inc. (NASDAQ: APOL), footwear manufacturer Crocs, Inc., (NASDAQ: CROX), digital theater company DTS Inc. (NASDAQ: DTSI), physician services provider Pediatrix Medical Group, Inc. (NYSE: PDX), and digital media company Sigma Designs, Inc., (NASDAQ: SIGM), as firms with “serious questions regarding management’s integrity vis-a-vis their shareholders.”
All five companies are tagged as “Very Aggressive” under Audit Integrity’s Accounting and Governance Risk rating. “These ratings are cause for concern that the companies may be intentionally deceiving their shareholders to mask serious problems,” according to Audit Integrity Chairman Jim Kaplan. The ratings take into account such factors as share repurchases, insider sales and a high ratio of incentive compensation.
Coupled with this apparent lack of candor in each company’s accounting and governance practice, are a number of high-risk events that have transpired over the last 12 months.
Perhaps not surprisingly, the companies highlighted here also fall short of their peers in other corporate governance areas. Crox, Pediatrix Medical, DTS and Sigma Designs each score below their industry peers on the Corporate Governance Quotient scores assigned by Institutional Shareholder Services (Apollo Group is not rated by ISS).
Kaplan notes that high-risk events are flagged only when activity substantially exceeds the norm for that industry. The report also identifies 14 other companies with “Aggressive” AGR Ratings, including Nutrisystem Inc, (NASDAQ: NTRI) Papa John’s International, Inc. (NASDAQ: PZZA), and The Charles Schwab Corporation (NASDAQ:SCHW).
The full list is available here.
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May 9th, 2008 at 3:59 pm
[...] was evident in Research Recap’s most popular post of the week, based on an Audit Integrity report identifying stocks with questionable management integrity. Audit Integrity [...]