Corporate Governance

Citigroup learns about diseconomies of scale

15 Dec 2004

The world's biggest bank made E15m on its government bond market raid in August but it is still paying for the coup in hostile headlines. Maintaining corporate reputations can require sacrificing potential profits. The bigger the company, the greater the sacrifice.

Forgeard threatens balance of terror at EADS

10 Dec 2004

The Airbus chief is increasing the stakes in his bid to become sole chief executive of the FrancoGerman defence group. The Germans have indicated they won t be bullied. Forgeard s strategy can only damage his chances of getting the joint chief executive post.

Fourtou digs in for long haul at Vivendi

8 Dec 2004

That is what the change in the group s structure suggests. Fourtou goes upstairs as chairman, but stays in charge of strategy. This frees him from the daily grind. It also suggests he is more likely to preserve the Vivendi empire than dismantle it.

Daimler picks strong man to co-head EADS

6 Dec 2004

The choice of Thomas Enders as joint boss of the FrancoGerman aerospace group shows a determination to counter growing French influence. He will be better able to resist French manoeuvrings and put forward an alternative vision of EADS's defence business.

EADS power struggle rightly doesn’t worry investors

3 Dec 2004

The European aerospace group s shares continue to rise despite FrancoGerman wrangling over the group s structure and strategy. Strategic uncertainty may not be optimal. But for investors it s better than EADS becoming the plaything of the French government.

Hedge fund ethics questioned over Vioxx

2 Dec 2004

A US fund shorted Merck after employing a researcher who played a key role in forcing its blockbuster painkiller to be withdrawn. The researcher didn't reveal his potential conflict. But the hedge fund must have known about it. That's dubious ethics.

Political meddling at Eni and Enel needs to stop

29 Nov 2004

The latest rumours have Enel s boss being parachuted into Eni, to replace the oil firm's CEO. Both men have their merits. But the real conclusion from this game of politicoindustrial musical chairs is that it should stop.

MyTravel ruling removes bondholder nuisance value

25 Nov 2004

In approving the travel group's contested debt swap, the judge has preserved value and contributed to more efficient capital markets. The ruling sets a precedent for valuing UK subordinated debt. If there is no economic recovery value, there is no nuisance value either.

Lastminute.com disappoints again

25 Nov 2004

Shares in the onceiconic online travel group slumped 18% in early trading following a sharp rise in pretax losses. The company blames the cost of integrating recent acquisitions but doubts about the strategy remain.

Romiti company probed over false accounting

24 Nov 2004

This is the latest blow for the Romiti dynasty, which used to be the powerbroker at Fiat, Mediobanca and Corriere della Sera. The probe could frustrate construction company Impregilo's planned capital increase, and the E550m bond repayment due in 2005.

Investors threaten Karstadt refinancing

23 Nov 2004

Some shareholders argue it should flog more assets and not raise equity. That's frankly barmy. It's like turkeys voting for Christmas. Yet under German law, this trivial challenge could delay and even scupper the refinancing. That seems absurd.

Dexia puts SanPaolo deal on hold

23 Nov 2004

A meddlesome leak that the FrancoBelgian bank was pursuing a crossborder merger infuriated key shareholders. Now they have all but killed the plan. Dexia may still do a deal but only once it has resolved these conflicts.

Management incentives vary wildly in French bids

23 Nov 2004

At Thales, executives are incentivised to fight tooth and nail for a high bid price. Not so at Snecma. The contrast shows that stock options much maligned in recent scandals aren t always bad news for shareholders.

EDF doesn’t need immediate capital injection

22 Nov 2004

The French utility's supposed capital requirement is a fiction aimed at getting unions to back an IPO. The state is trying to offload a problem on to the markets. Investors may wish to play this game. But they must impose careful terms.

Gold Fields defence moves off the back foot

22 Nov 2004

For the first time, the gold miner has started to talk about value as it tries to repel hostile bidder Harmony. That s good. But there are two problems. The approach is inconsistent with recent strategy. It is also partly valuedestructive.

Chinese aren’t riding to Rover’s rescue

22 Nov 2004

Reports that China's largest carmaker SAIC will secure the future of Rover s massive Longbridge production line are overblown. Any deal is likely to strip Rover of its last item of value its intellectual property rights leaving Longbridge to fend for itself.

Russia delivers Yukos’ coup de grace

19 Nov 2004

Until now, everything that Moscow has done to Yukos its escalating tax bills, even Khodorkovsky s imprisonment was reversible. Moscow s decision to auction off Yukos key oil unit in December truly marks the beginning of its end.

Novartis overhauls generics division

17 Nov 2004

Expected job cuts and factory closures at the world's second largest generics producer highlight shrinking margins throughout the industry. Competition has become bloodier since the introduction of "authorised generics", which savage the most lucrative part of the industry.

LSE may force brokers to reveal short positions

16 Nov 2004

Disclosure to the wider world would spell increased dealing costs and reduced liquidity. This should be avoided. But limited disclosure of short stock positions to the Exchange would aid UK market stability and reduce the risk of outright chaos.

Parmalat banks fight back

16 Nov 2004

They have already persuaded the bust dairy group to readmit E1bn in claims and are now trying to convince the courts to admit another E4bn. But Parmalat, for its part, is still hounding the banks. The disputes are virtually certain to linger after its planned relisting next year.