Africa Investor Magazine Survey Results on Investor Relations in Africa - March 2010
In February, Africa Investor, a premier provider of investment data, research, broadcast and published content to the investment community in sub-Saharan Africa invited me to participate in its survey on investor relations practices on the continent. The results which are published in the March edition of the magazine reveal a growing interest in the field and sharpened focus among practitioners on the issues they need to tackle for IR in Africa to assume the respected stature it enjoys among its peers in developed markets.
Catherine Wright of Africa Investor’s Johannesburg office co-ordinated the survey. Read More…
Fending for Themselves: Who’s Looking out for Shareholders?
This week on Street Talking in NEXT, I deplore the atrocious treatment retail investors regularly receive from companies on the Nigerian Stock Exchange.
In his immensely entertaining account of the global economic meltdown, Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System from Crisis – and Themselves, the author, Andrew Ross Sorkin, who is also the chief mergers and acquisitions reporter of the New York Times, describes a charged scene during a Lehman Bank board meeting held in July 2008. As the bank struggled to raise capital, Dick Fuld, its mercurial chief executive, invited Gary Parr, vice-chairman of Lazard Frères, the venerable investment bank, to provide his board with objective counsel on alternatives. Soon after the session began, Fuld felt that Parr was using it as an opportunity to ‘shamelessly plug’ Lazard’s experience with such Armageddon scenarios. Quickly, Fuld cut Parr off and thanked him for coming. Later that day, he telephoned the Lazard banker and threatened to fire him. The unflappable Parr replied, ‘that may be hard because you haven’t hired us yet.’ I enjoyed reading that story. Read More…
Peace in Our Time: Why the Shareowner versus Stake-tenant Conflict is Outdated
Recently, Nestlé Switzerland, the global nutrition, health and wellness giant, invited me to share my thoughts on the age-old shareholder-stakeholder debate on the company’s corporate social responsibility blog, Creating Shared Value. The article, which was published today, espouses my thoughts on the growing irrelevance of the traditional arguments that have pitted campaigners, advocacy groups and activists against corporations. I conclude that there has never been a better time to move from tense face-offs to constructive engagement.
Normative extremism in the shareholder versus stakeholder debate may well be on its way out. If shareholder value was the pre-eminent metric of corporate entity success in the past two decades, in the new decade it will be far less so. The undisputed twenty-plus-year reign of financialization could be drawing to an overdue end. Similarly, the exclusive rights on do-gooder patents that activist groups, environmental campaigners, social crusaders and community advocates have hitherto laid claim to might be nearer its expiry date than its partisans realize. After waging an acrimonious war for so long, veterans on both sides have almost failed to notice how close they are to a final settlement. My prognosis is that the fanatical bi-polarism of hardliners on either side of the debate will give way to one that vigorously searches for common ground. Read More…
Petroleum Industry Bill: Game of Chicken or Chicken Little
Last Sunday, an article I wrote on Nigeria’s controversial draft Petroleum Industry Bill appeared in NEXT newspaper. Rather than focus on the specificities of the proposed bill, which many commentators have already done, I approach the subject from the strategic dimension by looking at the international trends which have induced the Nigerian government to push it ahead.
It was never going to be easy sailing. As a rule, any legislation intended to overhaul an industry used to having its way is bound to meet with a hailstorm of protest. It either goes too far for the industry’s supporters and beneficiaries or is too soft for its critics. Just ask Paul Volcker, the former US Federal Reserve chairman. He has been at the forefront of efforts to introduce sweeping reforms in the US banking sector. In the opinion of Wall Street executives, like Barry Zubrow, chief risk officer at JPMorgan Chase, these proposals would ‘likely come at the expense of economic growth.’ On the other side of the divide, Senator Chris Dodd, chairman of the US Senate Banking Committee, expressed his dismay that ‘the refusal of large financial firms to work constructively with Congress borders on insulting to citizens.’ Read More…
Charts Hypochondriasis: A Panacea for Uppers and Downers Addiction
This week in Alrroya, the United Arab Emirates (UAE) business and financial daily, I urge public companies to reclaim their mandate in providing guidance to investors on their value generating potential from the tyranny of end-of-day stock price league tables.
I am not a huge fan of market closing price league tables. I studiously ignore titles like ‘Today’s 10 Bottom Stocks,’ ‘5 Leading Losers,’ ‘10 Market Chargers,’ ‘10 Exchange Laggards’ on the Markets pages and financial websites. These companies are not in any competition with each other in that sense. I am not aware of any chief executive that purposely determines that his company stock should rise the most or fall the least on any given day. Read More…
Different or Indifferent: Politics Does Matter After All
This week on Street Talking in NEXT, I take a step back from my parochial interests in investor relations and shareholder issues to trace the tight relationship between sound judgment among the political leaders and national economic progress. My inspiration has been the realization that even with the most enthusiastic and sincere efforts by companies, the responsibility for creating an enabling business environment lies with the government. If the government fails in that task, or the politicians deny that duty, then no matter the commitment of companies and the capital that investors are willing to pump in, the economy will not reach its full potential, ultimately hurting shareholders in the long run.
Today, my story begins with the unlikely case of Brazil. By the way, my interests have not shifted to football. Nonetheless, it is still a bit of deviation from my usual neck of the woods. First, a little bit of background to provide some colour. Read More…
The Value Additive Content of Executive Media Interviews
This week in Alrroya, the United Arab Emirates (UAE) business and financial daily, I champion the beneficial role that media interviews can play in raising the profile of companies among the investment community and addressing malignant information asymmetry.
Most public company executives regard media interviews as a distraction. In their view, they would rather be running their companies. As far as they are concerned, there is a dichotomy between minding the store and talking about the store. Read More…
The Scorecard Aesthetic: Rethinking Annual Report Design
This week on Street Talking in NEXT, I discuss the importance of design in encouraging shareholders to actually want to study annual reports, which is indispensable if they are to understand the business environment, strategy and operations of companies enough to hold boards accountable.
Collecting annual reports is my pet passion. For Christmas, my partner gave me the 2009 edition of the Graphis Annual Report, a coffee-table worthy tome of report design, which I had long fantasized over. At my local post office, I have gained some notoriety for receiving cartons of annual reports from all around the world. I enjoy studying the layout, language, typography, colours, photography, illustrations and paper. At home, I have a room stacked to the ceiling with reports. Just looking at them in that rainbow array is as visually satisfying to me as any aficionado’s art collection. Read More…
Investor communications and disclosure: It’s Broke. Let’s fix it
This week in Alrroya, the United Arab Emirates (UAE) business and financial daily, I discuss the role that robust disclosure rules can play in averting a repetition of the turmoil that has engulfed the market in the past two years. I have no doubts that the markets would pick up again, but if shareholders fail to draw the right lessons from past experience and companies refuse to change their ways accordingly, then it is only a matter of time before we have another panic season on our hands.
All fingers have been burnt, but some are more charred than others. Across the world, what started as a localized US sub-prime crisis, and later snowballed into a global credit crunch, has not been good to shareholders. While business partners, customers, employees and host communities have all been hit by the turmoil, shareholders have borne the brunt of the pain. They were the first in and it is now clear that they will be the last out. Read More…
Signal versus Noise: Scrutinizing Share Buybacks
This week on Street Talking in NEXT, I share my reservations on the acclaimed merits of recent capital structure reconfigurations, especially share reconstructions and buy-backs by companies on the Nigerian Stock Exchange. In place of these unproven merits, I urge companies to focus, instead, on other less discussed, but surer benefits of such programs for shareholders.
Equity overhang is the new leprosy. On a single day last week, the papers carried reports about Investment & Allied Assurance’s share reconstruction plans and Custodian & Allied Assurance’s intention to buyback 5% of its outstanding shares through an open market repurchase program. Two months earlier, Goldlink Insurance had completed its own share reconstruction discipline. This week, one paper carried the headline ‘Low Share Prices - Firms Embrace Share Buy-backs’.’ Are we entering an enthusiastic era of aggressive buy-backs? Is stock-swamping an odious condition? Read More…
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