By James A. Kaplan, Vice Chair, GMI Ratings Rigorous statistical research continues to demonstrate that corporate accounting fraud remains common and costly. Aside from tangibly harming the shareholders of fraudulent and even non-fraudulent firms, misleading accounting and disclosure practices weaken the integrity of capital markets; they further obscure issuer risks and undermine investors’ trust in [...]
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GMI Ratings’ Quantitative Equity Model (QEM) Uses Forensic Measures of Issuer Risk to Predict Equity Returns Globally, Across Industries, Large-cap and Small-cap Portfolios
New York (June 12, 2013) – GMI Ratings announced today the formal launch of the Quantitative Equity Model (QEM), which uses governance and accounting-related forensic risk metrics to predict equity returns. In connection with this launch, GMI Ratings published today detailed reports on the predictive value and other performance characteristics of QEM for North American, [...]
The Washington Post: The drone corporation
by Robert A.G. Monks We all know what military drones are. In my mind, there is an analogous version in corporate America. There are entities that have enormous power for good and bad, and yet insulate their operators from risk either way. Drone corporations are companies whose ownership is so diffuse that essentially they have [...]
Exide Technologies Files for Chapter 11 Bankruptcy Protection
By Lev Janashvili Automotive battery maker Exide Technologies Inc. filed for Chapter 11 bankruptcy protection today. According to filings with the U.S. Bankruptcy Court in Delaware, the company plans to implement a restructuring de-lever balance sheet and create a sustainable capital structure. Since June 2012, GMI Ratings’ Financial Distress Risk Model has rated Exide Technologies [...]
Study Confirms the Buffet Rule on Boards: Collegiality Trumps Independence
By Solange Charas, Guest Blogger In prior blogs, my research premise and finds were described. Essentially, my research shows that high and low governance-rated boards demonstrate a particular behavioral pattern in the board room. There are distinct realms of the boardroom (front and back stage), each with their own unique social norms. Directors falter when [...]
GMI Ratings and Ethix SRI Advisors Form Strategic Partnership
GMI to Offer Subscribers Access to Global Portfolio Screening Tools for Responsible Investors New York and Stockholm (June 10, 2013) – GMI Ratings and Ethix SRI Advisors have formed a partnership to integrate Ethix SRI data into GMI Ratings’ flagship research platform, GMI Analyst. The new data will allow subscribers to GMI Analyst to evaluate [...]
Event Alerts for Responsible Investors, 6.07.2013
In this week’s Event Alerts for Responsible Investors, we included 20 companies whose ESG and accounting risk profiles have been affected by recent events. Download the full Event Summary. Companies Environmental Social Governance Accounting Omega Protein Corporation (NYSE:OME) HSBC Holdings plc (LON:HSBA - US Listed) Infosys Ltd (NSE:INFY - US Listed) JPMorgan Chase & Co. (NYSE:JPM) Monsanto Company (NYSE:MON) Tyson Foods, [...]
Director Tenure and Gender Diversity in the United States: A Scenario Analysis
Our new report examines two related issues in corporate governance: poor board diversity and long tenures of board directors. Specifically, this report analyzes the potential effect of replacing various percentages of long-tenured male directors with women. For example, if less than half (46%) of the male directors in the S&P 500 with 10-plus years of [...]
Event Alerts for Responsible Investors, 5.31.2013
In this week’s Event Alerts for Responsible Investors, we included 19 companies whose ESG and accounting risk profiles have been affected by recent events. Download the full Event Summary. Companies Environmental Social Governance Accounting Wal-Mart Stores, Inc. (NYSE:WMT) NASDAQ OMX Group, Inc. (NASD:NDAQ) General Electric Company (NYSE:GE) Berkshire Hathaway Inc. (NYSE:BRK.A) Telstra Corporation Limited (ASX:TLS - US Listed) Total SA (EPA:FP - US Listed) Fidelity [...]
The Decline of Accounting and the Rise of Forensic Finance
By Lev Janashvili At the GMI Ratings seminar on May 14, NYU finance professor Dr. Baruch Lev spoke memorably about the decline of traditional accounting and our collective hope for a superior model. The relevance of this topic for investors today continues to become clearer, as evidence accumulates about the incidence and systemic repercussions of [...]
CommonWealth REIT Resurrects a Fallen Director
By Kyle Whisler, Takeover Defense Analyst At its annual meeting of shareholders last week, the board of CommonWealth REIT (NYSE: CWH) sank to a new low, explicitly demonstrating that the company has little interest in the rights of their shareholders. For the past few months, the company has been involved in a tumultuous takeover fight [...]
Event Alerts for Responsible Investors, 5.17.2013
In this week’s Event Alerts for Responsible Investors, we included 27 companies whose ESG and accounting risk profiles have been affected by recent events. Download the full Event Summary. Companies Environmental Social Governance Accounting Republic Services, Inc. (NYSE:RSG) Associated British Foods plc (LON:ABF); H & M Hennes & Mauritz AB (STO:HM B); Inditex SA (MCE:ITX); PVH Corp (NYSE:PVH); [...]
The Future of Fraud Detection
By Lev Janashvili Fundamental investment analysis typically assumes the reliability of corporate financial reports. But a growing body of empirical research characterizes this assumption as dangerously naïve, especially for investment portfolios pegged to broad market indices. In How Pervasive is Corporate Fraud? (February 22, 2013), researchers at the University of Toronto and University of Chicago [...]
Event Alerts for Responsible Investors
In this week’s Event Alerts for Responsible Investors, we included 22 companies whose ESG and accounting risk profiles have been affected by recent events. Download the full event summary. Companies Environmental Social Governance Accounting PG&E Corporation (NYSE:PCG) Bayerische Motoren Werke AG (ETR:BMW) JPMorgan Chase & Co. (NYSE:JPM) Anglo American Platinum Ltd (JNB:AMS) Enbridge Inc (TSE:ENB) adidas AG (ETR:ADS - US Listed) EPL Oil [...]
Berlusconi Casts Shadow Over New Government
By Stefan Borghi, Research Analyst On April 27, two months after initial elections, Italy finally formed a new government, ending a long political stalemate that threatened to deepen the country’s financial woes. The new government is a coalition formed by new Prime Minister Enrico Letta, which unites Letta’s center-left Democratic Party with Silvio Berlusconi’s center-right [...]
Quantifying what is qualitative and vice versa
This interview with GMI Ratings’ Ric Marshall was recorded during ESG Europe 2012 conference, held in Amsterdam, October 2012, organized by the Responsible Investor. “Quantifying what is qualitative and vice versa”, fsinsight.org, May 6, 2013.
The Cost of a False Freedom
By Lev Janashvili A Review of Citizens DisUnited by Robert AG Monks It probably shouldn’t surprise anyone if the typical reader of the financial press has formed the impression that we as a culture have essentially done what we needed to do about corporate governance. We used to ignore it, now we talk about it. [...]
Event Alerts for Responsible Investors, 5.3.13
In this week’s Event Alerts for Responsible Investors, we included 18 companies whose ESG and accounting risk profiles have been affected by recent events. Download the full Event Summary. Companies Environmental Social Governance Accounting Exxon Mobil Corporation (NYSE:XOM) Tenet Healthcare Corp (NYSE:THC) NII Holdings, Inc. (NASD:NIHD) Bob Evans Farms Inc (NASD:BOBE) Verizon Communications Inc. (NYSE:VZ) Royal Bank of Scotland Group [...]
GMI Ratings’ Women on Boards Survey Finds Legislation Major Driver of Change; Countries without Mandates Lag
New York – May 1, 2013 – GMI Ratings released today its annual report on Women on Boards. Based on data for almost 6,000 companies in 45 countries, and including historical data, the survey provides a broad and detailed assessment of global progress on gender diversity among corporate directors. The survey finds extremely slow progress [...]