Just came across this very thorough analysis of what it takes
to manage for the long-term.
There's no magic bullet, natch, but the combination of recommended steps makes obvious sense. To wit: Ditch earnings guidance and short-term incentives (the second applies to investment as well as corporate managers) and make your long-term strategy and operating model as well as your financial results as transparent as possible.
Not your cup of tea? Maybe you should raise your capital in Malaysia.
Just got a note from my editor suggesting that the above kicker about Malaysia was a bit cryptic. So let me explain. The line refers to the trend of companies raising capital abroad because of Sarbox. Malaysia is considered to have some of the poorest governed publicly traded corporations in the world, as reflected in the fact that Morgan Stanley took the country out of its emerging markets index fund some years back and as far as I know has yet to reinstate it. So companies that find it more attractive to raise capital by playing off-balance-sheet, options-backdating, cookie-jar and other financial games rather than just shooting straight might find that country more fertile ground. Here, it seems, the corporate kabuki involving earnings estimates seems to be losing its appeal, as even the Business Roundtable supports the findings I linked to.
Posted by CFO Staff: Ronald Fink | September 27, 2006 02:05pm
For further insight, see this story by Kate O'Sullivan that ran in our reporting special.
Posted by CFO Staff: Ronald Fink | September 28, 2006 02:18pm
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