Impact of accounting misstatements

In litigation involving a privately held software company being acquired in a stock transaction by a larger, publicly held software company, we calculated economic damages as a result of the acquisition being transacted at an artificially inflated stock price. The defendant, a large public accounting firm, was alleged to have failed in its duties to the public markets because of disregard for Generally Accepted Auditing Standards (GAAS), Generally Accepted Accounting Principles (GAAP), and other misrepresentations. Our analysis estimated the impact that specific accounting misstatements had on auditing negligence on the public accounting firm’s part, and calculated the relevant stock price “but for” these misstatements.