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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The Impact of Fraud on Shareholder Value: The Price You Do Not Have to Pay
June 17, 2013 in Corporate Governance, Daily Viewpoint
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
June 12, 2013 in Corporate Governance, Daily Viewpoint, GMI Press Releases
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, [...]
Exide Technologies Files for Chapter 11 Bankruptcy Protection
June 10, 2013 in AGR, Corporate Governance, Daily Viewpoint
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
June 10, 2013 in Corporate Governance, Daily Viewpoint
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
June 10, 2013 in Corporate Governance, Daily Viewpoint, GMI Press Releases
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 [...]
Director Tenure and Gender Diversity in the United States: A Scenario Analysis
June 4, 2013 in Corporate Governance, Daily Viewpoint, Research Reports - GMI
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
May 31, 2013 in Alerts & Bulletins, Corporate Governance, Daily Viewpoint
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 [...]
Adidas Missteps Go Beyond Its Supply Chain
May 28, 2013 in Corporate Governance, Daily Viewpoint, Ratings Watch
By Damion Rallis, Senior Research Associate Last month, an eight-story garment factory building collapsed in Bangladesh, killing more than 1,100 people. The Rana Plaza factory collapse is not only the world’s worst garment-industry disaster, but also a resounding wake-up call to the hazardous conditions present in apparel industry factories all across the developing world. As [...]
The Decline of Accounting and the Rise of Forensic Finance
May 28, 2013 in Corporate Governance, Daily Viewpoint
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
May 23, 2013 in Corporate Governance, Daily Viewpoint
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 [...]
Berlusconi Casts Shadow Over New Government
May 8, 2013 in Corporate Governance, Daily Viewpoint
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 [...]
GMI Ratings’ Women on Boards Survey Finds Legislation Major Driver of Change; Countries without Mandates Lag
May 1, 2013 in Board Diversity, Corporate Governance, Daily Viewpoint, GMI Press Releases
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 [...]
GMI Ratings ESG Coverage Expands to More than 6,000 Companies Worldwide
March 18, 2013 in Corporate Governance, Daily Viewpoint, ESG Ratings & Research
By James A. Kaplan Over the past year, GMI Ratings reached significant product-development milestones that have reinforced the firm’s leadership in environmental, social, governance (ESG) and forensic accounting research. The latest enhancements have made GMI Analyst, our flagship research platform, much more broadly relevant to all the market segments we serve. In particular, I’ll highlight [...]
Options Percolate at Starbucks
March 5, 2013 in Corporate Governance, Daily Viewpoint
By Scott Patterson, Compensation Analyst Manager Starbucks Corporation’s founder and CEO, Howard Schultz joined the exclusive ranks of ConocoPhillips’ James Mulva and Apple’s Timothy Cook, after realizing pay of over $117.5M in FY2012. Given the runaway success of Starbucks, and Mr. Schultz’s long tenure, this number is not a surprise. However, the manner in which [...]
Say on Pay “No” Votes Correlate with Securities Class Actions
March 4, 2013 in Corporate Governance, Daily Viewpoint, Executive Pay
By Agnes Grunfeld, CFA, Managing Director Since 2011, all US public companies have been required to submit their compensation plans to a periodic advisory vote by shareholders, which is commonly referred to as “Say on Pay.” A number of our clients have asked us whether “no” votes on Say on Pay seem to bear any relationship [...]
Female Directors in the FTSE MIB
March 1, 2013 in Corporate Governance, Daily Viewpoint, Research Reports - GMI
In 2011, Italy passed legislation requiring its public companies’ boards to be one-third female by 2015. A review of the boards of the forty companies in the FTSE Milano Italia Borsa (MIB) as of mid-February 2013 shows that these firms will have to make major changes in the next two years to comply with the [...]
Is Siemens’ Anti-Corruption Program Enough?
February 28, 2013 in Corporate Governance, Daily Viewpoint, Ratings Watch
By Damion Rallis, Senior Research Associate Since 2007, German multinational engineering and electronics giant Siemens AG (ETR:SIE; NYSE:SI) has been slowly recovering from a number of high-profile cases of price fixing and bribery. Issues of this magnitude, though resolved at the legal level, continue to dent the public image of Europe’s largest industrials company—Siemens was [...]
Payday Lenders are Subject to Increased Regulatory Risk
February 27, 2013 in Corporate Governance, Daily Viewpoint
By Hoang Nguyen, Senior Research Analyst On February 23, 2013, The New York Times published a report detailing how major U.S. banks are aiding internet-based payday lenders that offer short-term loans with very high interest rates, and how they allow the lenders to operate from abroad to avoid state laws. According to the report, the [...]
Boardroom Conflict: Productive or Not?
February 27, 2013 in Corporate Governance, Daily Viewpoint
By Solange Charas, Guest Blogger As Kimberly Gladman explained in an earlier blog post (less turnover better performance), I recently conducted a study that showed a correlation between GMI’s governance ratings and value creation at small and midsize public companies. My research also uncovered some intriguing new information about boardroom dynamics. The impetus for my [...]
Apollo Group Continues Its Perpetual Freefall
February 26, 2013 in Corporate Governance, Daily Viewpoint, Ratings Watch
By Damion Rallis, Senior Research Associate Shares at the embattled for-profit education company Apollo Group Inc. (NASD:APOL) continue to spiral downward, as the company said on Monday that The Higher Learning Commission (the group that accredits its University of Phoenix) recommended the university be placed on probation after determining it is too closely tied to [...]