GE: When Emotion Gets the Best of You
In the accounting world, being compared to Bernie Madoff is basically the equivalent of a five-alarm fire. That’s the situation General Electric found itself in last week, as Harry Markopolos – the man who exposed Madoff – is now raising concerns about GE’s accounting practices and future solvency.
So it’s not surprising that GE would hit back hard. And they have, calling Markopolos’s analysis “market manipulation” and issuing a point-by-point rebuttal of his claims.
Unfortunately for GE, the company did not make a convincing case that puts this story to bed. Instead, they let their emotions get the best of them, which prolonged the story and increased the stakes.
It is completely understandable for the executives to have an emotional reaction to Markopolos’s accusations. After all, the allegations themselves stir strong emotions. And so there is every reason to fight back hard, set the record straight, and defend the business. But to fight back hard, they should have fought back smart.
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