Solar shares tumble under accounting scrutiny

Investors are beginning to doubt profit estimates for China’s solar product manufacturers, after reports by research firms and rating agencies have called accounting practices into question, Bloomberg reported. Moody’s (MCO.NYSE) Investors Service on July 11 highlighted accounting risks at five Chinese companies including LDK Solar (LDK.NYSE). This was followed by a rash of resignations from solar company financial executives, including the directors of LDK Solar’s and Trina Solar’s (TSL.NYSE) audit committees. In response, eight Chinese companies in the 17-member Bloomberg Large Solar Index have declined 13% since June 2, bringing their share valuations to less than half the average of the Hong Kong benchmark share index. Solar companies have already been struggling with falling demand and prices due to shrinking markets in Germany and Italy.