Who's Cooking the Books Now?

Two investor polls show wide distrust of accountin

In the wake of Enron and other corporate scandals, U.S. consumers are gaining a deep distrust of the way businesses report their results, two new polls conclude.

According to the monthly UBS/Gallup poll of 1,001 investors, 89% of those surveyed in February said they were familiar with Enron's bankruptcy and the accounting irregularities leading to the Houston energy company's downfall. Moreover, 62% of the respondents believe accounting concerns are widespread in business today. And about half that number suggested that they would be less likely to invest in stocks as a result of their concerns over accounting practices. Meanwhile, a poll of 363 investors conducted in February by Opinion Research Corporation for TowersGroup Inc., a New York public relations firm, indicated that 43% said they have less confidence in the stock market in the wake of Enron.

The UBS/Gallup survey, conducted Feb. 1-17, also indicated that investor sentiment slipped as stock markets skidded last month. The UBS/Gallup index of investor optimism fell to 92 in February, down sharply from 115 the previous month. The index had a baseline of 124 when it was established in October 1996. UBS said that while overall sentiment had ebbed, investors under age 40 actually became more optimistic during the month--perhaps one early indicator of the sharp market recovery that began in late February and has continued into March. More than half of investors also expected the U.S. economy to be in recovery by late summer.

Results of the UBS/Gallup survey are at www.ubs.com/investoroptimism. A summary of the Towers survey is at www.towerspr.com.

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