Publications
Publications
- October 2023 (Revised April 2024)
- HBS Case Collection
Accounting Red Flags or Red Herrings at Catalent? (A)
By: Joseph Pacelli, ZeSean Ali and Tom Quinn
Abstract
Fund manager Janet Curie asked for a recommendation about the pharmaceutical company Catalent. The company seemed like a solid investment. However, a pair of research reports issued over the previous two months complicated this narrative. GlassHouse Research, a short seller that profited when stocks declined in value, identified accounting red flags at Catalent. Fiat Lux Partners, on the other hand, released a report countering most of GlassHouse’s claims, arguing that GlassHouse fed investors red herrings. Both GlassHouse and Fiat Lux had anonymous funders and employees—and long disclaimers explaining their financial interests. Curie was at a loss—who, if anyone, could she trust? Who had uncovered actual wrongdoing, and who was using accounting tricks to mask or exaggerate real-world factors?
Keywords
Accounting Audits; Budgets and Budgeting; Earnings Management; Cost Accounting; Fair Value Accounting; Revenue Recognition; Integrated Corporate Reporting; Fairness; Moral Sensibility; Values and Beliefs; Government Legislation; Conflict of Interests; Announcements; Blogs; Debates; Investment; Trust; Business and Shareholder Relations; Pharmaceutical Industry; Accounting Industry; United States
Citation
Pacelli, Joseph, ZeSean Ali, and Tom Quinn. "Accounting Red Flags or Red Herrings at Catalent? (A)." Harvard Business School Case 124-024, October 2023. (Revised April 2024.)