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The Business Ethics Debate: What Impact?

The recent concern about executive ethics should re-enforce some investment decision-making guideposts.  Companies which communicate well-defined corporate objectives and which consistently report performance against those objectives are to be preferred.

Investor Confidence: How Companies and Analysts Collude

Private investors, unsuspectingly, have become the losers in the relationship between companies and analysts.

Employee Share Options: Too Quick to Judgement

The move to expense employee share options is a knee-jerk reaction which fails to come to terms with the fundamental problem.

Corporate Sustainability: Capital v People

Organizational sustainability could be put at risk by attitudes towards employees.  The high profile chief executive whose arrival is accompanied by expectations of radical change could well be a destroyer of value over time.

CLERP 9: Not What Investors Need

The Treasurer’s latest proposed changes to corporate governance practices should not make investors feel more secure about committing funds to public companies.  The proposals try to deal with the few horses that have conspicuously bolted, not the many still to escape.

Looking For Messages From The AGMs

thebigpicture suggests you take the time to attend because AGMs can say a lot about a company – even when it is unintentional.

'Market Darlings' to 'Fallen Angels': How Investors Can Cope

Several pending corporate restructures highlight how short-lived is the success of the typical Australian listed company.  This should be a genuine concern for long-term equity investors because it affects adversely the overall valuation accorded the Australian market.

Succession Planning: A Test of Sustainability

The announcement by Foster’s Group Limited that it had changed its executive responsibilities in a management reshuffle highlighted succession planning as an issue for listed companies.

Board Composition: The Need for Diversity

Board selection criteria should emphasize the importance of independence but they should also be extended to include diversity as an equivalent criterion.

Executive Rewards: Choosing Peers

Looking for alternatives to executive share schemes is taking some companies further away from an alignment with shareholder interests.

Under Siege: A New World For Directors

Apparently directors of listed companies are no longer enjoying the experience as much as they once did.  They need to alter the way in which they present themselves to shareholders if investors are to make their lives easier.

Why Abandon Employee Options

Decisions by directors to terminate employee share option schemes in favour of other forms of executive rewards do not necessarily represent progress in reforming executive remuneration standards.

Have You Heard? No More Rumours

The continuous disclosure regime under which Australian listed companies must operate has been toughened since 1 January.  Now companies must respond, under certain circumstances, to market rumours about their activities.  This helps private shareholders but also opens up new avenues for abuse.

What’s The Point of Analysts?

Is there any point in looking to analysts any longer for earnings forecasts? Recent experience is indicating that, when t counts, they offer little value for investors.

The Cuffe Kerfuffle: Another Lesson

The Cuffe kerfuffle at the Commonwealth Bank contains many examples of how a company should not communicate with its shareholders.

Accounting: More Changes, Less Clarity

Prospective changes to accounting standards are an upcoming challenge for investors.  Parallel sets of accounts for investment decision-making purposes will likely emerge, defeating some of the reasons for making the changes.

Corporate Reform: Making It Harder To Vote

Moves to reduce the notice period for meetings of shareholders from 28 days to 21 days do little to improve the prospects of shareholder participation.

thebigpicture’s Accounting Standards

Accounting standards should give investors what they need: information to enable considered decisions about the value of companies to which they subscribe their savings.  Much of the upcoming legislation, the plethora of governance standards and revamped accounting practices will simply ensure that companies wasting shareholder funds will conceal the evidence in a prescribed fashion.

You Can’t Legislate Competence

The focus on audit committee composition and the forms of company accounts as matters of public policy will not necessarily afford greater protection for investors.

HIH: Competence v Dishonesty

The $40 million Royal Commission into the causes of the collapse of HIH may not have much general applicability.  Even the deterrence value of subsequent prosecutions might be limited since the evidence suggests that the collapse was more a consequence of incompetence than premeditation.

The Australian Market Shrinks….Again

The destruction of value at AMP, once one of Australia’s leading financial institutions, throws up further questions about the Australian continuous disclosure regime.  It also highlights that strategic failure, once evident, is not easily rectified.  And, of course, it is yet another example of Australia’s golden rule of corporate behaviour: when in doubt, restructure!

St George: How To Slay A Dragon

With a long trail of corporate strategy failures among Australian listed companies, it lifts the spirit occasionally to see a positive example to highlight how business can be conducted. St George Bank is proving that the best form of takeover defence is the rarely seen determination to make the company too expensive for a predator.

Insider Trading: There Must Be More

The prosecution of Rene Rivkin for insider trading provides a welcome signal that authorities are trying to level the investment playing field. But there are many weak spots along the corporate information chain. This prosecution might simply be a lucky stab in the dark for those seeking to protect investors from the effects of insider trading.

Conspirators or Markets?

Are copper miners conspiring or simply doing what the market requires?

Dual Listings: Where Are The Benefits?

Australian dual listed companies have failed to provide shareholders with many of their advertised benefits. A recently published study by economists at the Reserve Bank of Australia reviewing all the examples of dual listed companies has confirmed that they have failed to deliver on key promises.

Are Three Bottom Lines Better Than One?

A triple bottom line is an oxymoron. Adoption of the idea for corporate reporting might signal a company being pulled in too many different directions.

Should Directors Hold Shares?

Holding shares is supposed to help directors feel more like the shareholders they are elected to represent. But it might be better for directors to feel differently about their company’s performance.

Setting Standards: Accounting v Value

Australia’s accounting standards do not measure up according to an international accounting expert. Australian equity investments risked being ostracized. But do accountants really know what constitutes value? That is the key issue

for an investor trying to judge the debate.

The Dilemma: Grow Or Give Up

Australian companies need to be more disciplined in their quest for growth. Past failures, however egregious, should not cause us to throw in the towel.

Executive Pay: The Spin Stops Here

More detailed reporting of CEO remuneration is beginning to occur but directors seem reluctant to embrace the most important aspect of public disclosure.

Biotechs: Boom Or Malaise?

With around 80 companies listed on the Australian stock market making a bid for medical history, investor excitement should be running high. However, the experience of Australian biotech companies is a sobering mixture of failure, disappointed promise and, at best, modest accomplishment.

No More Earnings Surprises ?

Companies, not analysts, are now responsible for profit forecasts. This is one of the significant changes to occur as the reporting and disclosure regime has evolved in recent years.

The ACCC: Is It Restraining Growth?

Aggressive application of competition policy might constrain how big an Australian company can become. Ultimately, this has an impact on the type of investments available to Australian investors.

Corporate Governance Or A Clash Of Egos?

Shareholder activists are preparing for another AGM season. Directors are bracing their defences. As politicians sense a demand for their services, more regulations are being prepared. And, amidst the posturing, the real needs of

genuine investors are largely forgotten. But there is a way forward.

Guideposts For The AGMs

It's AGM season. Should you bother? thebigpicture suggests you take the time to attend because AGMs can say a lot about a company - even when it is unintentional.

Corporate Returns: Working Assets Harder

Improved financial returns from Australian listed companies have come from working existing assets harder. Business expansion has not been important. And, despite some improvement in returns, larger industrial companies are barely adding value for shareholders.

The Angels Keep Falling

One of the most perplexing challenges for an Australian equity investor is dealing with the propensity for self inflicted wounds among Australian companies. The frequent conversion of market icons to fallen angels damages the standing of the Australian equity market and complicates investment decision making.

Market Titillation Or Proper Disclosure?

Stricter reporting standards should apply to announcements from early stage technology companies. For disclosure rules to be effective, firmer guidelines about what constitutes sound market communication need to be in place.

Share Plans: Opportunity or New Risk?

Capital raisings through share purchase plans are becoming a market fad with a rising chance that they are more for the convenience of small companies and less for the convenience of small shareholders.

Directors: What Should They Do?

The recent experience of National Australia Bank has raised questions about the roles of directors.  Directors are becoming more like executives in terms of the expectations to which they are being subjected.  This will not be good for corporate performance.

Tell Everyone; Tell Everything

Coincidentally, at the top three Australian listed companies, the best interests of investors are being subjugated to the self interest of others as needless information gaps raise investment risk.  Despite the rules, investors are being forced to speculate.

ASX: Where Conflicts Lurk

The choice of a new CEO for the Australian Stock Exchange (ASX) offers a chance to contemplate his unique role. His differing stakeholders make for potential conflicts.

CEOs Facing The Pressure

One of the challenges faced by Australian executives is how to respond to the constant demands for newsworthy business decisions.  The pressures might be pushing companies toward poor strategic outcomes.

Corporations: Still Risk Averse

Corporations in the USA and Australia have been reluctant to employ or invest.  The new regulatory environment is aggravating the reticence to take risks.

Asset Values: The New Brooms

Asset revaluations on the accession of a new chief executive are now commonplace despite being contrary to the interests of shareholders.

‘Opportunism’ Is Not A Dirty Word

Opportunism is to be condemned.  So say companies being subjected to public bids.  Shareholders should actually demand more opportunism and reward it handsomely.

Financial Reporting: What To Look For

Deciding what to look for in the mountain of information which comes with the annual reporting season is a challenge for an investor.  Here are some guideposts to help take the value investor to the peak and back safely.

Continuous Disclosure For Government, Too

Anyone with an interest in good policy should be concerned at the disclosure rules which apply to the government as we approach a federal election.  There might be some lessons to be drawn from the continuous disclosure regime applying to corporates.

Accounting Standards: Benefits Questioned

Companies are presently channeling more resources into their accounting functions to make their public reporting conform to international accounting standards.  This is to make them more attractive to offshore investors.  However, investors want more than a change in accounting practices.

Company Reporting: Too Many Rules

With June year end companies having to report annual results by 31 August, a mountain of corporate financial information from listed companies became available in the past few weeks.

Do Governance Rules Matter?                             

Corporate governance strictures seem likely to burden companies without providing compensating investor benefits.  

Buy the Founder; Sell the Kids                                       

Today’s corporate governance rules imply that family control of public companies is not in the best interests of portfolio shareholders.  This is too simplistic a view of life according to some recent research.

The AGM Season: Let Battle Commence                      

Shareholder activists are ready for another AGM season.  Directors are bracing their defences.  And, amidst the posturing, many of the real needs of genuine investors are forgotten.  There is a better way.

AGM Season: Why You Should Bother

AGMs can say a lot about a company - even when it is unintentional.

New Brooms And Fallen Angels

A ferocious attack by the CEO of National Australia Bank on the bank’s previous management has highlighted two important features of the Australian equity market.

Earnings Guidance: Does It Help?

There has been increasing emphasis on earnings guidance as companies report their results. The nature and value of the guidance on offer varies considerably.

Telstra: Setting The Tone 

Telstra has hit the headlines again as it fights to extricate itself from a web of poor governance practices, structural failings and populist policy making.  The bigger picture is that its behaviour will have an impact on how people around the world judge the Australian market.

Amcor: Boxed-in By Circumstances

Amcor’s position in the industrial value chain might have had something to do with its recently disclosed trade practices predicament.

Directors Take A Stand On Value

National Foods showed that there is a different way of handling an unwanted takeover bid.  But it requires directors to be confident about the value of their company.  Few appear to be.