A gap has opened up in UK regulation, leaving investors exposed to Companies Act and accounting issues without a clear remedy. Despite all the focus on governance and stewardship, investors are still getting nasty surprises. Tesco and Quindell are perhaps just the highest profile of those involved in further investigations. Making the stockmarket safer should […]
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Tag Archives: incentives
Audit firm governance needs to reflect the public interest
June 10, 2015 
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Is audit quality good enough? In large part that must depend on how well firms that carry out audits are run, and the Financial Reporting Council has opened a consultation on its governance code for such firms. The Audit Firm Governance Code dates to 2010, when the FRC introduced it to address audit problems from […]
Continue reading Who wins from ‘adjusting’ earnings per share? Time for some rules.
March 3, 2015 0 Comments
Most companies in this results season are delivering reassuring updates, but can investors trust the numbers? Tesco’s issues have not only rattled its own shareholders; across the market, analysts wonder how widespread accounting concerns might be. Growth is scarce, and CEOs are under pressure to deliver. This has put more emphasis on presentation; but recent […]
Continue reading Why do the biggest companies disappoint on governance?
October 16, 2014 0 Comments
Tesco’s high profile failure reveals the interaction between incentives, failed strategy and governance. Unfortunately, despite hiring what should be the best non-executives, the record shows the biggest companies have more governance blow-ups. What is it about the way that big businesses operate that makes them more accident-prone, not less? Even the investors lucky enough not […]
Continue reading What can behavioural finance teach investors?
October 10, 2014 0 Comments
What can behavioural finance teach investors about interpreting financial and economic data? My talk at the Royal Institution’s 14-10 Club offers some examples of behavioural biases from reporting by central banks, companies and fund managers. The talk and slides can be viewed or uploaded as a pdf from this Dropbox link.
Continue reading When will the ECB crack down on banks’ related party lending?
September 22, 2014 0 Comments
Will the European Central Bank’s asset quality review spot all the problem banks? Asset quality is a risk factor in the European Banking Authority (EBA) Comprehensive Assessment, but regulators may be missing a key underlying pattern in failure. Banco Espirito Santo has highlighted the issue of inter-related lending: loans to shareholders, affiliates and related parties. […]
Continue reading Private Equity : the tricks of the trade
July 7, 2014 0 Comments
Private equity has a serious image problem – an overhaul of its practices is overdue. The industry has always been seen as hardheaded, but now there is a growing perception of a callous attitude to other stakeholders. Private equity now faces attacks from regulators, investors and politicians. Against a weaker economic background, a re-run of […]
Continue reading How to cut investment costs – and what bits to keep
June 2, 2014 0 Comments
Investors might be surprised at how big an impact expenses can have in the long term, and how much is still hidden. Yet there are ways to cut costs, as well as some apparent savings that are likely to be a false economy. “Do costs matter?” might look a simple question, but is often confused […]
Continue reading Who loses from IPO conflicts?
December 9, 2013 0 Comments
The process for initial public offerings is one of the most opaque areas of the market, and is ripe for reform. The current IPO boom mirrors the excesses of the tech bubble a decade ago. That resulted in fines and new rules – but it’s still not fixed. There is a clear public interest in […]
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Behavioural Edge 
PwC Survey shows slow progress on UK executive pay and bonuses.
The latest PwC survey on executive pay and rewards in the FTSE 100 is presented as an improving trend. Yet it is remarkable that just 36% make full disclosure of bonus benchmarks. There is little sign of realism in incentives; many rewards remain detached from sustainable value creation. Too many do not disclose numbers to […]
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