Peace in Our Time: Why the Shareowner versus Stake-tenant Conflict is Outdated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…
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…
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…
Growing up in frontier markets
This week in Alrroya, the United Arab Emirates business and finance daily, I discuss the demands by international fund managers on public companies in frontier markets like Nigeria to improve their corporate governance and risk management processes.
Frontier markets like Ghana, Kenya and Nigeria are being forced to grow up. Their indulgent childhood is fast coming to an end. Global investors have lost their patience and expect companies in these fringe economies to begin to act like adults. That means that they will be held to the same accountability and responsibility standards as their developed market peers. Companies in these emerging emerging markets can no longer serve as capricious extensions of the personal piggy banks of the founders or government. This should come as no surprise. To a keen observer, it was only a matter of time before the petting ended. Read More…
My New Year Wish List: Dreaming of the Big Board
This week on Street Talking in NEXT, I argue for the listing of successful private companies on the Nigerian Stock Exchange.
Alright, so today’s title should have been ‘My Christmas wish list’. In fact, I got bitten by this wishful thinking bug only a few days to Christmas. On December 20, 2009, Binos Yaroe, general manager, Market Operations & IT at the Nigerian Stock Exchange, announced that its governing Council had approved the change in name of its junior board from Emerging Markets to Alternative Investment Market & Private Placements. The move, he explained, was to ‘provide incentives and waivers’ to more companies to list on the NSE. That was the fire for my wire. The only snag is that now that the festive season is over, wish lists have been put on freeze. Well, sort of. But mine is a different kind of dream gift basket. The presents are not really for me in the selfish sense of sole ownership or benefits. On the contrary, granting my wish would profit the genie as much as the kettle rubber. Read More…
Hi-Fi: Pumping up the Valuation Volume
In announcements on strategic actions, companies often present the singular act as sufficient cause for a boost in shareholder value. This week in Street Talking on NEXT, I argue that that is not enough. To enjoy a higher valuation, companies need to improve the information environment to give investors a clearer view on the business. Simply focusing on other companies that have enjoyed higher trading multiples consequent to such transactions misses the subsequent actions they took in ensuring that the markets had a better understanding of their value creating actions.
This week marks the second anniversary since Apple, the maker of iconic products, announced its entry into the mobile handset space with the iPhone. On the same day Steve Jobs, its CEO, demoed the phone at the January 2007 MacWorld Conference, the company changed its name from Apple Computer to simply Apple, Inc. The Cupertino, California-based company’s decision to excise ‘computer’ from its name was intended to reflect its transition from solely designing and making personal computing products with cult status to a broader portfolio of consumer electronics goods and services, including on-line distribution of music, home entertainment systems, digital audio players, cellphones, software and of course, computers with wider appeal outside its core geek demographic. Read More…
CSR Salad: Is Corporate Social Responsibility a fad diet or nutritional staple?
This week in Street Talking on NEXT, I argue that the corporate social responsibility initiatives by companies on the Nigerian Stock Exchange ought to aim further than philanthropic gestures to a broader set of objectives of significance to socially responsible fund managers.
The story I am about to recount is not intended as a joke. Just the other day, I stopped at my roadside vulcanizer’s to peak my tire pressure. Fill done, I brought out my wallet to pay. As I made to pay, Musbau, the head vulcanizer, smiled at me and announced with all the benevolence he could muster, ‘Oga, no worry. Today, na free as part of my own corporate social responsibility.’ Corporate social what? Obviously, my shock at his familiarity with the term failed to register. ‘Yes, I don decide make I dash my customers free air today as part of Christmas appreciation,’ he beamed. Read More…
Rebel with[out] a cause: Theory and Practice of Shareholder Activism
This week on Street Talking on NEXT, I review the tactics of shareholder agitants on the Nigerian Stock Exchange in 2009 and identify why they enjoy very limited success in galvanizing popular support.
In his famous 1947 essay, ‘The Sources of Soviet Power’, George Kennan, the late distinguished foreign policy wonk, writing under the pseudonym ‘X’, advised the US government that only ‘the adroit and vigilant application of counterforce at a series of constantly shifting geographical and political points’ could contain Russia’s imperial ambitions. His ideas would lead the US to sponsor several proxy wars in countries far removed from the epicenter of its vital interests such as Angola, Laos and Vietnam. Read More…
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