Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Lady Godiva Accounting Principles (LGAP)

What it is:

Lady Godiva accounting principles (LGAP) are informal, unofficial accounting principles under which companies make disclosures beyond what generally accepted accounting principles (GAAP) require.

How it works (Example):

Lady Godiva is a famous historical figure from the 11th century. She famously rode naked through the streets of an English town to protest new taxes her husband, an earl, had imposed on the town. (It worked; the earl repealed the taxes.)

Why it Matters:

LGAP is in some regards a noble risk. On one hand, a company that uses LGAP goes above and beyond basic expectations and is more likely to be regarded as "transparent" by shareholders and stakeholders. On the other hand, a company that uses LGAP risks revealing things that could make it less competitive. Accounting scandals tend to motivate legislators and industry regulators to formalize more Lady Godiva accounting principles.
 

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