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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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April 11, 2008 4:05 PM ET
The fact that a much-hyped campaign to oust members of Morgan Stanley’s board came up way short this week should perhaps come as no surprise: A new survey by proxy advisory firm RiskMetrics Group has found most investors are reluctant to turn “directors into scapegoats for credit-related problems.” According to the survey of 100 officers at investment management firms, insurance companies and pension funds, 60% said that they believed businesses hammered by the credit crisis lacked adequate risk management expertise. But roughly the same percentage of those institutional representatives who vote on corporate proxies said that they are “not likely or unsure” whether they will hold boards accountable for their failure to mitigate subprime-related risk. “This really suggests that investors are not looking to blame directors,” said Bimal Patel, manager of corporate governance and policy for RiskMetrics. “But I still think it’s fair to say that they’re expecting directors to take the sufficient steps to cure the exposed weaknesses.” He added that he believes shareholders are “expecting directors to take a proactive approach in improving the company’s risk practices going forward.” In light of the crisis, Mr. Patel said he expects more firms to add chief risk officer positions, and/or establish stand-alone board risk committees. “We might be seeing an interesting evolution in the structure of risk management going forward,” he said. “Risk will certainly be one of the major focuses of boards going forward.” The primary governance concerns cited by most respondents in the wake of the subprime debacle were lack of transparency (38%) and pay practices tied to short-term performance (29%). Only pension funds seemed overly worried about a lack of board oversight, with nearly half citing it as their No. 1 concern. As for the main cause of the subprime crisis, 38% of the respondents cited “ineffective risk management by corporations with subprime exposure.” Another 25% blamed the meltdown on an “absence of regulation” of the mortgage industry. Only 3% said poor corporate governance was the single major cause.
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