%0 Journal Article %A Chandra S Mishra %A Ralph Drtina %T Accounting Manipulations and Business Failures %B The Case for Effective Financial Disclosure and Corporate Governance %D 2004 %R 10.3905/jpe.2004.434764 %J The Journal of Private Equity %P 27-35 %V 7 %N 4 %X In this study, using accounting performance measures, cash flow performance measures, market based performance measures, and statistical models, we analyze financial and stock market data to determine if there were any early signs of financial distress with Enron and WorldCom, two firms with reported accounting manipulations. We also analyzed two other business failures that were not associated with reported accounting manipulations, United Airlines and Federal Mogul. Our results consistently predict the impending demise of Federal Mogul and United Airlines. With few exceptions, the measures we examine generally failed to foresee the bankruptcies of WorldCom and Enron. The study underscores the need for effective financial disclosure and corporate governance to create a climate of investor confidence in the business community. %U https://jpe.pm-research.com/content/iijpriveq/7/4/27.full.pdf