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Chicago corporate heavyweight ADM rekindles bad memories with accounting crisis.

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TLDR:

  • Archer Daniels Midland (ADM), a Chicago-based commodities trader and food processor, is facing a crisis as it investigates accounting practices in one of its key business units.
  • Questions about improprieties in disclosure at big publicly traded companies often lead to a loss of investor confidence, as seen in ADM’s 25% drop in stock price since the investigation was announced.
  • The accounting scandals of Enron, WorldCom, Waste Management, and Arthur Andersen serve as cautionary tales for companies like ADM.
  • The investigation at ADM is centered around its nutrition segment, which accounts for 8% of revenue but is one of its most profitable units.
  • ADM’s stock price had already fallen 20% in the past year due to weakness in the nutrition segment.

Chicago can’t afford for more companies to stumble, so the fallout from ADM’s crisis needs to be limited and any malfeasance should be appropriately punished.

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