Good News about Bad Press For Corporate Governance Humiliation Pays Off


The article also talks about research that finds an increase of 3% in value through a positive mention in the press and a decline of 57% at a negative mention in the press. You see the potential for abuse? You see the potential for good?


 

Wouldn't it be a wonderful world if everyone was good and honest?

There would be no Enrons or Ken Lays. Corporate governance would not take up so much time and everybody would have time to watch the sunset and play with their kids in the park.

Well, as dreams go, this one is way up there. Now, it is time to get our heads out of the cloud to do some serious thinking on the issue of governance and the role of the press.

Just like there are no "honest" corporations, there are no "honest" press outlets. No, I do not mean that we live in a corrupt society and everybody is dishonest. I mean, we need to take another look at the definition of "honest!"

There have always been agendas and there will always be agendas. The issue arises when the management's agenda does not match up with the shareholder agenda. Each side can accuse the other of dishonesty or realize that there is need to align these two agendas. Do not get me wrong, there are absolute rights and wrongs and Enron is a case in point.

The press can play a significant role in getting these agendas aligned. Their role is simple: unearth and expose information on actions being taken by management. Let the shareholders decide if those actions are in their interests or not.

The enclosed article discusses the famous expose of Gazprom. This was orchestrated by a party that obviously stood to gain from corporate governance reform at the company. They played the press and if we are to believe this article, the press was onto them as well and did not let that bias creep into their reporting. In the end the shareholders won!

The article also talks about research that finds an increase of 3% in value through a positive mention in the press and a decline of 57% at a negative mention in the press. You see the potential for abuse? You see the potential for good?

Read the article>>

 




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