Does Accountable Accounting Matter in Small-Caps?
article 06-28-2016

Does Accountable Accounting Matter in Small-Caps?

Speaking with at the Morningstar Investment Conference, Portfolio Manager Charlie Dreifus explains the link between Generally Accepted Accounting Principles (GAAP) and ethical corporate conduct.


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On June 14, 2016, Portfolio Manager Charlie Dreifus sat down with to discuss the significance of ethical accounting and Generally Accepted Accounting Principles (GAAP).

Speaking with host Gillian Kemmerer, Charlie is concerned by, "The increasing misuse in our opinion, of non-GAAP figures which are almost always higher than the GAAP numbers. And the market has embraced that."

The accounting practice and financial documents, to Charlie show, "The culture of a company… the ethical landscape."

When looking closely at companies, Charlie looks for accountability: "We’re looking for companies that have a culture of ethical conduct; they portray the numbers as they best reflect the economic reality rather than making them look nicer than they really are, as well as not abusing the situation in terms of their incentive compensation."

Charlie Dreifus, who has 46 years of investment experience, manages Royce Special Equity Fund and Royce Special Equity Multi-Cap Fund.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the person speaking and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements.

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. Smaller-cap stocks may involve considerably more risk than larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.)

Investments in securities of small-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see “Primary Risks for Fund Investors” in the prospectus.)



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