CME Group (CME) said it completed its acquisition of the Kansas City board of trade (KCBT) for an undisclosed amount. Such deals have contributed to an unusually high proportion of the Chicago-based derivatives marketplace’s assets. CME explained that its agreement with KCBT, the futures market for hard red winter wheat, would provide the customers of [...]
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Already High In Goodwill Assets, CME Does Another Acquisition
December 3, 2012 in Corporate Governance, Daily Viewpoint
HP’s Acquisition Record Suggests Habit, Not One-off Error, FT Says
December 3, 2012 in Corporate Governance, Daily Viewpoint
HP’s recent acquisition record, which has seen billions of dollars of writedowns, suggests not a one-off error of judgment but a habit, the Financial Times said in an editorial December 2. When CEOs chase the stock market as HP did with Autonomy, they run the risk of continually buying high and selling low – a [...]
At Vertex Pharmaceuticals, Executives Are Thankful For No Clawback Policies
November 30, 2012 in Corporate Governance, Daily Viewpoint, Ratings Watch
By Damion Rallis, Senior Research Associate Problems for Vertex Pharmaceuticals Incorporated (NASD:VRTX) really hit the fan this past May when the company revealed that it had overstated the clinical data for an experimental cystic fibrosis treatment. Since the troubling news, the company’s share price has steadily dipped, legal action has arisen, and ongoing governance-related red [...]
Groupon’s Management Fails to Regain Credibility With the Market
November 30, 2012 in Corporate Governance, Daily Viewpoint
Groupon Inc. (GRPN) stock prices were falling early Friday after media reported that a board meeting about CEO Andrew Mason’s performance ended without any announcement of plans to replace him. The development is a recent example of continuing market skepticism about the daily deal website in the wake of questions about its accounting. “The board [...]
Held From U.S. Contracts, BP Still Shows Environmental Problems
November 29, 2012 in Corporate Governance, Daily Viewpoint
The U.S. Environmental Protection Agency announced on Nov. 28 that it has temporarily suspended BP from new U.S. government contracts, citing the energy group’s “lack of business integrity” with regard to the Deepwater Horizon explosion. Since the disaster in 2010, BP continues to show signs of problems ranging from its experiencing additional events that hurt the environment [...]
3D Systems Corporation: Doth They Protest Too Much?
November 28, 2012 in AGR, Corporate Governance, Daily Viewpoint, ESG Ratings & Research, Ratings Watch
By Damion Rallis, Senior Research Associate While the share price at 3D Systems Corporation (NYSE:DDD) continues its steady and impressive climb—up more than 200% since last November—a closer look at the company’s governance profile reveals several troubling indications that 3D Systems could be due for a reversal. Not only has the 3-D printing company been [...]
Slammed Again For Practices, Samsung’s Ownership Still Problematic
November 27, 2012 in Corporate Governance, Daily Viewpoint, Flash Reports
Critics recently protested against Samsung Electronics Co., Ltd. (SEO:005930)’s alleged patent infringement and misuse of Chinese labor. We continue to warn about problems with the Korean consumer electronics giant’s corporate governance such as its ownership structure. The telecom network equipment maker Ericsson said it was suing Samsung for patent infringement after two years of talks [...]
When the Wealthy Weigh In, European Responsible Investment Tops EUR 7 Trillion
November 27, 2012 in Corporate Governance, Daily Viewpoint
By Kimberly Gladman, CFA, Ph.D., Director of Research and Risk Analytics Eurosif recently released its third biennial report on responsible investment by high-net worth individuals (HNWIs) in Europe. It shows great enthusiasm on the part of that continent’s elite. The survey of family offices, wealthy individuals, private banks, and wealth managers shows that European HNWIs now [...]
Eyes Wide Shut: Behind the Masks of Accounting Fraud
November 26, 2012 in AGR, Corporate Governance, Daily Viewpoint
By James A. Kaplan and Lev Janashvili Introduction: A Teachable Moment Just a day after we published GMI Ratings’ first “Black Swan Risk List”, the biggest accounting scandal in recent memory burst into national news, conforming to our prognosis with uncanny timing. Hewlett-Packard, a prominent member of our risk list with an ESG score of [...]
GMI Ratings Releases Second “Black Swan Risk List” of North American Companies
November 26, 2012 in AGR, Corporate Governance, Daily Viewpoint, GMI Press Releases
40 Companies with the Most Aggressive Accounting Practices and the Highest Risk of Major Drops in Share Prices New York – November 26, 2012 — GMI Ratings, the leading provider of research on environmental, social, governance (ESG) and accounting-related risks affecting the performance of public companies, today released its second “Black Swan Risk List”, identifying [...]
Aspen Technology’s Awkward Mix of Accounting Failure and Insider Sales
November 21, 2012 in Corporate Governance, Daily Viewpoint, Ratings Watch
By Damion Rallis, Senior Research Associate While the share price at Aspen Technology (NASD:AZPN) continues its steady and impressive climb—up more than 50% since last November—a closer look at the company’s governance profile reveals several troubling indications that Aspen could be due for a reversal. Not only has the software solutions company been mired in [...]
GMI Ratings Governance Update | Moody’s Corp.
November 20, 2012 in Corporate Governance, Daily Viewpoint, Flash Reports
Moody’s Corp. (MCO) could better safeguard itself from the business conduct failures that the Securities and Exchange Commission discovered in its second annual review of nine ratings agencies. The New York firm needs to take more steps to prevent its senior managers from abusing their powers. Without specifying names, the U.S. regulator said on Nov. [...]
Diagnosing Fragility: The Promise of Forensic Accounting
November 19, 2012 in AGR, Corporate Governance, Daily Viewpoint
By James A. Kaplan and Lev Janashvili Nassim Nicholas Taleb’s latest book (Antifragile: Things that Gain from Disorder) delivers pointed awareness-raising insights into systemic vulnerabilities that threaten the sustainability of social and economic institutions. Just as his earlier work that turned the phrase “Black Swan” into a viral meme, Antifragile convincingly reinforces many of the [...]
Black Marks on Black Swans: 16 Subtle Signs of Stocks Teetering on the Cliff
November 19, 2012 in AGR, Corporate Governance, Daily Viewpoint
By Lev Janashvili Earlier today, we released GMI Ratings’ first “Black Swan Risk” list, identifying 200 North American companies with the highest risk of major drops in share prices within the next six months. Based on Accounting and Governance Risk (AGR®) ratings, this list represents the latest distillation of GMI Ratings’ research on the relationship [...]
GMI Ratings Governance Update | The McGraw-Hill Companies
November 19, 2012 in Corporate Governance, Daily Viewpoint, Flash Reports
The U.S. Securities and Exchange Commission published a review of credit ratings agencies’ business conduct that noted findings such as the failure to follow policies, keep records, and disclose conflicts of interest. While the regulator did not say who failed at what, financial filings show that the people who run The McGraw-Hill Companies (MHP), of [...]
Legal Issues Driving down Governance Rating at HSBC
November 16, 2012 in Corporate Governance, Daily Viewpoint, Ratings Watch
By Greg Ruel, Senior Research Associate HSBC Holdings plc (LON:HSBA), Europe’s largest lender in terms of market value, has been mired in regulatory trouble throughout the fall. Since this time last year, GMI Ratings has typically scored HSBC in the average range for long-term sustainability risk. However, the company’s rating as measured by its global [...]
GMI Ratings Governance Update | Wal-Mart Stores, Inc.
November 16, 2012 in Corporate Governance, Daily Viewpoint, Flash Reports
Wal-Mart Stores, Inc. (WMT) confirmed this week that a previously disclosed investigation into bribery at its overseas units expanded into markets including Brazil, China and India. While it’s positive that the retailer is taking steps to examine allegations of such behavior, Wal-Mart could do more to improve the strength of the board that supervises such [...]
GMI Ratings Governance Issue | Vodafone Group Plc
November 15, 2012 in Corporate Governance, Daily Viewpoint, Flash Reports
Vodafone Group Plc (VOD) adjusted its earlier estimates about the value of operations in Spain and Italy downward by £5.9 billion. While the British mobile phone giant clearly had no power to prevent the European crisis, its financial statements have contained warning signs that its managers tend to present their performance in the best possible [...]
Ratings Watch: Quarterly Review, Fall 2012
November 14, 2012 in Corporate Governance, Daily Viewpoint, Ratings Watch
By Damion Rallis, Senior Research Associate As we enter into our third month of Ratings Watch articles, it is important to point out one of the main advantages of keeping a close eye on this in-depth issuer coverage. The placement of a company on our Ratings Watch list signals an array of ESG KeyMetrics™ that can [...]
GMI Ratings Governance Issue | Eastman Kodak Co.
November 14, 2012 in Corporate Governance, Daily Viewpoint, Flash Reports
As Eastman Kodak Co.’s (EKDKQ) cash dwindles and its creditors battle in bankruptcy court for repayment, some objected that the photography company’s CEO Antonio M. Perez continues putting his own interests first when it comes to compensation. Kodak said Nov. 12 that it managed to swap $317 million of existing debt and to obtain $476 [...]