The Great Recession revealed one of the weakest links in Africa’s quest to build strong capital markets — bogus audited statements. After the fall of Lehman Brothers, the cascading dominoes spread around the world crippling markets and decimating companies. Despite the Wall Street-engineered financial avalanche, investors lost money in African equities largely because some audited statements were revealed to be patently deceptive.
As investigations exposed all the myriad contributions to the market collapse, the asymmetries between the audited statements and what was happening in companies were mind-blowing. Regulators failed markets, as some public companies and auditing firms orchestrated monumental misdeeds, which continue to haunt the region. Yet since those epic letdowns, few bold regulatory reforms have been enacted in most African exchanges.
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