Accounting: Profits Without Honor

Accounting is not normally thought of as an exciting subject. But on Wall Street these days, it is the focus of intense interest. The notion has taken root that corporate profit reports are not always what they seem, and investors' suspicions have been nourished by the accounting profession itself, a staid club that is usually a model of gray-flannel decorum.

Stocks of franchising companies, for example, have been among the Street's latest go-go favorites. But last fall Leonard Savoie, executive vice president of the American Institute of Certified Public Accountants, warned CPAs...