Elan could become a takeover target at current share price levels, according to some market sources. With its shares falling 28 per cent to €14 in early trading in Dublin and down to $12.90 in pre-open trading in New York from the overnight $14.85 close, some sources suggest the pharmaceutical company could make an attractive acquistion at these price levels for one of the large publicly quoted pharmaceutical groups.

However, other sources saw a takeover bid as unlikely, suggesting that the complexity of its "financials", concerns about its product pipeline and the absence of any products in the $1 billion-plus (€1.1 billion-plus) annual revenue range meant there would be little interest in the firm among the larger pharmaceuticals.

"It does not scream 'takeover target'. Though it is cheap at these levels, there are so many uncertainties it is difficult to see any rush to get involved," one analyst commented.

While the shares came off their lows over the day in Dublin, fund managers in Dublin warned that Elan had some way to go to meet best practice on Irish corporate governance. They were critical of Mr Geaney's dual role as chairman and chief executive of the company, a practice in open conflict with the Irish Association of Investment Managers' guidelines. One fund manager pointed out that, contrary to the combined code on corporate governance, Mr Geaney does not have to go before shareholders every three years for re-election to his position. In addition, the company has awarded share options to its non-executive directors.

IAIM secretary general Ms Ann Fitzgerald said there were a number of corporate governance issues in relation to Elan. Commenting on the share options, she said: "It may be the norm for non-executives to have share options in the United States, but it is totally unacceptable in the Irish and UK markets."

Expressing some frustration with the performance of Mr Geaney and executive vice-president Mr Tom Lynch, some market sources suggested they were unlikely to be asked to step down by the board. "It will be interesting to see what will happen to the management, but I do not expect to see any changes at the top," one senior source said.

The sharp drop in Elan shares since January 17th - when they hit their 2002 high of €50.27 in the Dubin market - is another blow to an accounting profession already badly shaken by the collapse of Enron. It has drawn attention again to the differences between accounting rules in the US and those in the UK and Ireland.

While US rules are seen as among the strictest in the world, it is easier there for companies to move large debts or commitments off their balance sheets by putting them into special purpose vehicles. Accounting sources say the US rules are sometimes so specific that it is easier to find a way around them than would be possible under the Irish and UK rules, which are based on general principles.

The share slide shows that any confusion in a company's accounts or financial information creating more questions than answers will automatically lead to a sharp sell-off by investors, now unwilling to accept anything less than full transparency in accounts.

In Elan's case, more confusion was caused by the presentation of results according to US Generally Accepted Accounting Principles (GAAP), which showed a better outcome than under Irish accounting rules, because the Irish rules require the consolidation of some of its off-balance-sheet operations.

While Elan insisted it had nothing to hide, the information was difficult to digest, and in a nervous market, investors sold out.