One would think so, but there are a bunch of factors against once one gets close to something like the stock market. The two big ones are uniformity of financial metrics and honesty.
One of the huge problems in an unregulated stock market is that you have people exaggerating their financial position either because they aren't doing due diligence or because they are lying. Investors (including workers paid in stock options) have no way to evaluate the claims, and so you get exaggerated claims, false advertising in efforts to raise money, etc. We give some deference to those only seeking investment from small pools of friends or family, or those seeking help from venture capitalists who are presumed to be able to spot irregularities themselves, but on the stock market this is considered dangerous.
The second problem has to do with the convenience of stock analysts but is a related problem. The analyst always has less information than the CFO of the company he is analysing. Differences in ways of accounting lead to distorting effects as analysts read into them more of a difference than is justified by the facts. The stock market thus breeds a need for uniformity of accounting standards that small, locally supported and financed businesses do not need.
The result are things we call "securities law" which always includes "following the best practices from the relevant accounting organizations" (i.e. IASB or FASB depending on where you are).
Do the right thing is sufficient, on the other hand, if the business is a small one serving local markets and invested in by local individuals. It breaks down quite a bit as one tries to scale up.
One of the huge problems in an unregulated stock market is that you have people exaggerating their financial position either because they aren't doing due diligence or because they are lying. Investors (including workers paid in stock options) have no way to evaluate the claims, and so you get exaggerated claims, false advertising in efforts to raise money, etc. We give some deference to those only seeking investment from small pools of friends or family, or those seeking help from venture capitalists who are presumed to be able to spot irregularities themselves, but on the stock market this is considered dangerous.
The second problem has to do with the convenience of stock analysts but is a related problem. The analyst always has less information than the CFO of the company he is analysing. Differences in ways of accounting lead to distorting effects as analysts read into them more of a difference than is justified by the facts. The stock market thus breeds a need for uniformity of accounting standards that small, locally supported and financed businesses do not need.
The result are things we call "securities law" which always includes "following the best practices from the relevant accounting organizations" (i.e. IASB or FASB depending on where you are).
Do the right thing is sufficient, on the other hand, if the business is a small one serving local markets and invested in by local individuals. It breaks down quite a bit as one tries to scale up.