Should Groupon Be Dumped On?
(Updated at 6:36 p.m.)
NEW YORK (TheStreet) -- Groupon went public last November and raised $11 billion, so it has received lots of attention from investors and media. It also recently restated its fourth-quarter 2011 earnings, which resulted in lower revenue and net profit as well as a shareholder lawsuit.
So do we look at Groupon's stumbles as the growing pains of a young, shooting star or do we question the company's governance, risk management, and compliance (GRC) mindset and adherence to accepted regulatory practices?
Ultimately, there's a question of trust, if not essential competence in Groupon's financial systems and audit abilities.
Suffice it to say, the curse of success with any/every growing business comes with learning the new regulatory hoops imposed on larger publicly traded companies.
New products and services, regardless of their fresh innovation and creativity like the Groupon model presents, are still subject to the rules of fiscal transparency, accountability, and disclosure.
To be sure, things were simpler before the rampant fiscal deceit of many high-profile companies in the last few decades and the resulting regulatory guidelines intended to stop this deceit.
It remains to be seen whether increased regulatory burdens will crush innovative start-ups or simply bring start-ups to a new level of checks and double checks on their compliance with GRC principles.
Governing boards and leading CEOs must realize that investors are nervous these days and that to inspire trust, companies must have solid fiscal stewardship and a commitment to sound business practices.
Are politicians meddling too much by imposing regulations? Sure. Politicians will grab as much control and power as they can. But to be fair, a lot of so-called corporate "leaders" will too. So, the dance continues.
In conclusion, Groupon shouldn't be dumped on, but it must be reminded that the curse of success is more scrutiny and ever-increasing demands for higher standards. I wish Groupon good luck in innovating even as it keeps up with -- and plays by -- the rules.