Companies that are the subjects of Securities and Exchange Commission enforcement actions for financial fraud are more than twice as likely to go bankrupt as those that are not, according a study by Deloitte Forensic Center.
The study analyzed SEC accounting and auditing enforcement releases issued from 2000 to 2007, as well as bankruptcy filings between 2000 and 2005. Bankrupt companies were more than twice as likely to have more than 10 alleged financial statement fraud schemes as non-bankrupt companies. Bankrupt companies were three times more likely to face SEC enforcement actions for fraud.
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