GMI Ratings, a governance research firm, produces a semi-annual Risk List of companies with a high level of concern regarding future returns. The proprietary accounting and governance metrics used by GMI focus on factors which extend beyond traditional fundamental measures.
Some of these factors show constancy over time, while others are dependent on recent actions by management. These actions may be a function of a changing business strategy; market conditions that bear on the company’s operations; or an attempt by management to disguise operating problems. In all cases, these companies require a higher level of scrutiny than their peers in order to better understand why they have been flagged for the number of extreme measures they exhibit.Download