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Communicating trustworthiness: 1

Funds International, 2002, p.14

Copyright Lafferty Ltd. Jun 2002 ;ISSN: 1393-0486

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  • Title:
    Communicating trustworthiness: 1
  • Subjects: Accounting ; Annual reports ; Auditing procedures ; Corporate governance ; Institutional investments ; Regulation ; Revenue recognition ; Scandals ; Stockholders ; Trust
  • Is Part Of: Funds International, 2002, p.14
  • Description: Post-Enron investors are left wondering where creative accounting is going to reveal itself next. It is recognised that it is relatively easy to be seen to be adhering to corporate governance and accounting standards, so investors no longer have a genuine confidence in the corporate information provided by companies. Clearly, a cultural shift in company behaviour is required. Katriina Cooper of the corporate literature division at London-based consultancy Corporate Edge looks at how companies can use communications tools to engender trust from stakeholders Taken together, these corporate governance checks and balances and revised accounting standards would seem to limit the possibility of self-serving practices, which over the past 12 years have revealed themselves on both an individual and corporate level. The collapse of Barings and the recent AIB scandal have shown that the necessary limitations are not currently in place to prevent individuals seriously damaging organisations. Furthermore, the list of companies that have collapsed through severe mismanagement and corruption - including Polly Peck, BCCI, and now Enron - only shows that many of those in top positions are managing companies with personal gain as a central focus. Substantial share option schemes used to reward top executives, combined with the sort of personality prepared to deceive investors, greatly influence the conniving to grow the share price artificially. The broader-reaching outcome of the Enron collapse is that no one can truly claim to have genuine confidence in the information provided to us by our companies, in relation to their business practices and results. So, how do companies for which best practice does not take a token form, in relation to numbers, governance and broader issues that affect the successful running of a company, persuade their stakeholders that what they report is true; that an investment in their company falls within acceptable levels of risk? The solution is that, in addition to companies changing their behaviour (a fundamental), they will necessarily have to change the content and method of communication too.
  • Publisher: London: Lafferty Ltd
  • Language: English
  • Identifier: ISSN: 1393-0486
  • Source: ProQuest Central
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