2005 saw a new record broken for the number of earning 'restatements' which is hardly surprising as the pressure to do better each quarter is immense.
We would actually forecast that most if not all companies play around with their earnings because the statistical chance of normally always 'beating by a penny' (as most firms do) is far too high for it to be such a regular event.
Of course if you think about the problem then it's actually in nobody's interest to cry foul. This is why only a few fall guys are ever outed as long as they don't get greedy such as in Enron.
Summary
Look for Wall Street to continue to get murkier in the future and build some of this risk into your overall portfolio. Also, if any company that you hold shares in even hints at financial problems, dump them at market without blinking.
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