GMI Analyst: ESG and Accounting Metrics for Investment Use Consecutive Quarters of EPS Growth

The following summary appeared as part of Governance Metrics International’s GMI Blog. GMI is the leading independent provider of global corporate governance and ESG ratings and research. Corporate stakeholders – including leading investors, insurers, auditors, regulators and others – use GovernanceMetrics services to identify and monitor risks related to non-financial measures covering key environmental, social, governance and accounting risk factors.

Unusually long periods of steady growth in quarterly earnings per share (EPS) may be a sign of aggressive accounting. EPS is a comparatively easy metric for top executives to manipulate, and they may be especially tempted to do so if their compensation is tied tothe achievement of EPS goals. GMI Ratings’ Consecutive Quarters of EPS Growth metric flags companies where periods of increase in quarterly EPS may warrant heightened investor scrutiny…. GMI Analysts Consecutive Quarters of EPS Growth metricidentifies companies reporting more than four consecutive quarters of EPS growth, measured on a trailing-twelve-month basis….

GMI Ratings -Consecutive Quarters-10-2012

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