You are here : Homepage : Blogs
Like us on Facebook RSS Feed







Management focus on shareholder return
Management | 4 Comments | Thu 22 Sep 2011
Bookmark and Share

An important message from Value Investment Institute piece, A letter to Company CEOs from a Value Investor (January 2011) is that management should act in the long term interests of shareholders, "a value investor expects integrity, diligence and an unwavering focus on long term value.' Yet all too often management, for various reasons, seem to ignore this advice. Two VII pieces focused on Japan, Is Japan a Value Trap? (January 2011), and A Lesson in Japanese Corporate Governance from Third Avenue (June 2011), highlight the extreme case of a lack of regard for shareholders in Japan. Truth is we all can think of companies elsewhere with management exhibiting little apparent regard for shareholder value. We want to generate a debate: how important is it to have management who are focused on generating shareholder return?



Comments

1.
On 17/10/2011 14:31:12, Paul wrote:
Japanese optical company Olympus Corp fired their British CEO after 6 months in position sending the stock down 18%. While we cannot be sure of what the exact motivation for this was it appears to be protection of the 'Culture' See the link:
http://uk.reuters.com/article/2011/10/14/uk-olympus-idUKTRE79D0PN20111014

2.
On 17/10/2011 14:35:38, Rowan wrote:
Interesting twist developing in the Olympus saga. Ex-president Woodford was investigating suspicious payments to company advisers when he was fired. He claims he was concerned for his safety and left Japan immediately. He further claims that the "board is contaminated and needs to be cleaned up".

http://www.bloomberg.com/news/2011-10-16/olympus-auditor-called-for-probe-into-acquisition-payments-report-shows.html

3.
On 10/11/2011 10:35:23, Paul wrote:
This saga could really highlight a serious issue with Japanese corporate governance. Olympus appear to have been hiding losses on financial investments by exaggerating the amount paid for acquisitions. This practice may date back to the early 90s following the beginning of the sell off in Japanese asset prices. According to Bloomberg Toshiro Shimoyama, President between 1984 and 1993 is quoted in the Nikkei industrial daily newspaper in 1986 as saying, 'When the main business is struggling, we need to earn through zaitech, though doing too much is no good.' Zaitech is the process of 'earning money through financial speculation' Given how long ago this statement was made one would have imagined the effects would have washed out. It now appears obvious they have not! How many other Japanese companies have engaged in this process? Can we have any faith in their accounts? What were the auditors doing? Is it unfair to blame Japanese 'corporate culture' for this? Indeed should we expand this question out? How can we have faith in any company financials?

4.
On 06/01/2012 16:17:20, David wrote:
For those hoping the Olympus fraud would spark a change in corporate Japan, look away! Former whistle-blowing Olympus president Woodford has halted his bid to spearhead a board room change at the company.

"None of the major Japanese institutional shareholders have offered one word of support to me,” Woodford said in a statement released today.

Plus ça change, plus c'est la même chose....

Post a comment

Name :  
 * 
E-mail :  
 * 
Anonymous :  
 
Yes No
Comment :  
 * 
  
Please type in the verification code shown below
Verification :  
 * 
Fields marked with a * are required.

 
 



Keyword : 
 




When we examine the investment case for any company we must think of competitive threats. Amazon is increasingly mentioned as potential competiti ...

Gotham City Research's caped crusader brought down Gowex, a formerly €1.4 billion Spanish company, using superior analysis of publicly available i ...

What is the most sensible way to think about the cost of capital? How should an analyst appraise an investment opportunity? This article steers ...

It seems that acquisitions are ‘in' these days, nowhere more so than in the specialty drug sector. With each deal, excited investors and analysts ...

Having worked in various parts of the investment industry the author has an interesting perspective on the business of investment. His experience ...


Value Investment Institute Chair Gary Connolly and board member John Looby discuss topical issues including: Recent instability in the most stable ...



Forename : 
Surname : 
E-mail : 




 Articles 
 Blogs 



Management
(1)
(2)



Investment Strategy
(31)
(6)



Buffett
(1)
(2)



Book Reviews
(1)
(0)


 Articles 
 Blogs 



January 2015
(1)
(1)



October 2014
(1)
(0)



September 2014
(1)
(0)



February 2014
(1)
(0)



January 2014
(1)
(0)



November 2013
(1)
(0)



October 2013
(1)
(0)



September 2013
(0)
(1)



August 2013
(1)
(0)



July 2013
(0)
(1)



June 2013
(1)
(0)



April 2013
(1)
(0)



March 2013
(1)
(1)



November 2012
(1)
(0)



October 2012
(1)
(1)



August 2012
(1)
(0)



July 2012
(1)
(1)



May 2012
(1)
(1)



March 2012
(1)
(0)



February 2012
(1)
(0)



January 2012
(1)
(1)



December 2011
(1)
(0)



November 2011
(1)
(0)



September 2011
(4)
(1)



April 2011
(1)
(0)



March 2011
(1)
(0)



February 2011
(2)
(0)



January 2011
(5)
(1)



Copyright 2018 Value Investment Institute

Website Terms & Conditions