... than 150%. There are also many other ruses were being used to inflate profit numbers. The discrepancy between the national accounts data was not just the result of accounting irregularities. The indiscriminate use of stock options, which effectively allow a company to take staff costs off-balance sheet, have long been used to inflate earnings, as well as provide 'incentives'. The habitual pension holiday was also another ruse that allowed companies to flatter profits. As the stock market soared, US companies did not grant retirees benefits that are more generous. They simply booked the capital gains as lower operating expenses. Many companies routinely booked capital gains from cross-shareholdings as operating profits too. Several large corporations such as Enron, World Com, Xerox etc have filed for bankruptcy after revelations about systematic misrepresentations in financial statements. What started with an admission of false profits by Enron has rapidly become a rout ...

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