Listening to a local talk radio program on sports, I was struck by the dominance of vacuous / light opinion as the currency of conversation. The discussants had little of deep substance to say as the facts in most analyses of baseball are clear; i.e., there are useful statistics with which to support and attack arguments. These stats are often dispositive; e.g., whether offensive player A or B had a superior season may usually be resolved by reference to key concepts such as runs batted in, runs scored, etc., though these are contingent on other factors, especially the production of offensive players surrounding A / B in the lineup during the season.

Financial data superfically seem clear; e.g., whether company A or B had a superior period may be resolved by reference to key statistics such as return on assets. However, the underlying events with financial data are less clear than baseball stats; e.g., an observer can readily discover for him/herself whether player A got a double with the bases loaded in the seventh inning. However, the quality and quantity of financial data are continually at issue (cf. Enron’s initially reported “accounting facts” with their restatements c. 2001).

The preparation and reporting of financial statements (as well as other performance and nonfinancial data) offer the disciplines of financial forensics and fraud examination much to argue about, notwithstanding the good faith efforts of independent gatekeepers and exogenous checks on performance (e.g., external auditors, inspectors general, credit rating agencies). Otherwise, our conversations would be as empty as many public “analyses” of yesterday’s Mets / Yankees game.