One of the oddities of the modern US stock market is its strong predilection for share buybacks. Rather than finding profitable outlets for their cash holdings by investing internally, corporations have taken to shrugging their shoulders and simply handing the stuff back en masse. The idea of shrinking the number of shares outstanding has acquired…
For Facebook and Alphabet, Big-Ticket Fines Cause Limited Pain – WSJ
VEA Vice Chair Nell Minow is quoted in this Wall Street Journal story about whether the penalties Facebook will be paying is enough to discourage further abuses. Financial penalties typically are meant to discourage further misbehavior or make victims whole, said Nell Minow, vice chair of ValueEdge Advisors, a corporate-governance consulting firm for investors.“That second…
Ex-Corporate Lawyer’s Idea: Rein In ‘Sociopaths’ in the Boardroom – The New York Times
We’re pleased that retired lawyer-turned novelist Jamie Gamble finally figured out that his corporate clients are “sociopaths” but believe he is creating a false dichotomy. Shareholder value does not require corporate officers and directors to ignore ethics and values; on the contrary. It is impossible to create long-term, sustainable shareholder value without scrupulous attention to…
A “Solution” That Will Make Things Worse
Professors Stephen M. Bainbridge and M. Todd Henderson acknowledge that boards of directors are not very effective, especially when the companies they are supposed to oversee are larger and more complex than any private organizations in history. But the solution they propose in their new book, Outsourcing the Board: How Board Service Providers Can Improve…
Employees Leave When Employers Are Unfair
Diversity and inclusion are not nice to have. They are not irrelevant to or a drag on financial returns. They are essential for risk management and avoiding unnecessary costs. Companies like to say in their annual reports that their people are their most important asset. Diversity and inclusion — along with pay, training, and turnover…
Major automakers strike climate deal with California, rebuffing Trump on proposed mileage freeze – The Washington Post
What is most interesting about this story is the questions it raises: If it wasn’t the auto industry pushing for the regulatory rollback, when who was it? If they pushed for it, why did they cooperate with this? Four automakers from three continents have struck a deal with California to produce fleets that are more…
UK: FRC Statement on Green Investing
From the UK: The Government has announced its Green Finance Strategy which recognises the role of the financial sector in delivering global and domestic climate and environmental objectives. In response, the FRC has issued a joint statement with other financial regulators, including the PRA, FCA and the TPR which can be viewed here, while the…
Why Are Stock Buybacks So Popular? – The Atlantic
VEA Vice Chair Nell Minow is quoted in this Atlantic story about buybacks. Today, another effort is under way to raid corporate assets at the expense of employees, investors, and taxpayers. But this time, the attack isn’t coming from the outside. It’s coming from inside the citadel, perpetrated by the very chieftains who are supposed…
Time to tackle ‘Big Four’ auditors’ bad behaviour | Descrier News
The Carillion case is just one example in a string of alleged transgressions lighting a fire under the major audit firms, as British policymakers finally confront the need to crack down on the industry. KPMG is still haemorrhaging clients and staff after its extremely controversial work for the Gupta family in South Africa, whose close ties to former…
Jeffrey Epstein Moved Money Overseas in Transactions His Bank Flagged to U.S. – The New York Times
We think a solution here could be a Dram Shop Act-style law holding bankers responsible for the crimes committed by those who become “intoxicated” with its products. As Deutsche Bank officials this year scrambled to extricate themselves from a years-long relationship with Jeffrey Epstein, the wealthy financier charged this month with sex trafficking, they uncovered…
