Canada and the World Backgrounder articles from May 2003

Canada and the World Backgrounder archives from May 2003

Corporate do-gooders: while scandals have been defining business in recent years, many companies put a lot of dollars into improving society. (Introduction).
May 1, 2003... The 1990s were not just about greed, they saw a lot of corporate generosity too. The Canadian Centre for Philanthropy reports that Canada has more than 1,700 foundations, which grant more than $900 million every year to Canadian charities. Here...

Capital comforts: with all the recent scandals, corporations have left themselves wide open to harsh criticism, but their development and growth has provided us with a high standard of living along the way. (Capitalism And Business Growth).(Global compact)
May 1, 2003... Critics of capitalism say it's an economic system based on greed and selfishness. They are firmly convinced that the only motive the capitalist has or has ever had is the accumulation of more capital and perhaps the exercise of power: the goal...

Swindlers R us: big business has tarnished its image in a very big way, from gold diggers to creative accountants. Chief executives and accountants have become less trusted even than politicians and journalists. (Corporate Scandals).(Related article: Mr. Andersen would not be pleased.)(Related article: What's happening to the top brass?)
May 1, 2003... Confidence in the Canadian mining industry was hit hard in March 1997. That's when it was revealed that Bre-X Minerals Ltd. might have been making up stories about its vast gold discoveries. At the time, Bre-X founder David Walsh assured...

Who guards the guards? It's a lot easier to lose trust than it is to regain it, but some new rules aim to help corporations climb back to a higher level of respectability. (New Rules).(American crackdown on corporate accounting)(Rules versus principles)
May 1, 2003... In the wake of corporate accounting shenanigans, auditors have come into the spotlight. They may not have an exciting image, but their job of reviewing financial statements and accounting practices is a big one. As The Economist pointed out...

Oink, oink: even when companies go bust and investors lose a bundle, executives usually do just fine. (Executive Compensation).(It ain't easy)
May 1, 2003... Another major issue that surfaced in the corporate world amidst all the scandals is the fancy compensation packages chief executives enjoy, even when the companies they run are on their beam-ends. The numbers might be described as...

The politics of business: nowhere is the collaboration between business and politicians closer than in the United States under President George W. Bush; in Canada, the relationship is more subtle. (Politics).(Tightening the reins)
May 1, 2003... One of the things that Enron had going for it was that the company's chief executive was good friends with U.S. President George W. Bush. The company had made huge contributions to the presidential election campaigns of the current president...

Profits before people: the ultimate breach of ethical behaviour is to sell a product knowing it to be dangerous or to operate a plant in such a way as to threaten the lives of workers or the community. Unfortunately, extremely unethical business practices such as these are not as rare as they should be. (Ethics).
May 1, 2003... The first Ford Pinto rolled off the production line in 1971. It was a rush job; an attempt to seize a slice of the growing sub-compact car market. Normally, it takes 43 months to bring a car from the concept stage to production. The Pinto went...

Swapping privacy for growth: one way of turning a small successful company into a big successful company is to find lots of people to invest in it. And, one way of doing that is to turn a private firm, which doesn't offer shares to the public, into a public one, which does. (Public Versus Private Companies).(related articles: All in the family: family corporations; A dynasty crumbles: Timothy Eaton Company)
May 1, 2003... There are a lot of reasons for a company to go public, but primarily, it's to raise money. Going public means selling shares in the business to anybody who wants to buy them. Growing companies continually need funds for: expansion; paying...

Quote ... unquote.(business advice)(Brief Article)
May 1, 2003... "From my experience, the objective of many audits of public companies is not to provide the highest quality of assurance and information to investors, but to 'get by' without major scandals and litigation." Baruch Lev, professor of...

Glossary.(terms related to the stock market)(Glossary)
May 1, 2003... Annual Report--A financial report sent yearly to a publicly held firm's shareholders. An independent accounting firm must examine the financial report and approve it if satisfied it is accurate. This examination of the company's books is called...

No bull.(origin of the terms bull market and bear market)(Brief Article)
May 1, 2003... When stock markets are rising, it's called a "bull" market; when the market is sinking it's called a "bear" market. There's a fair bit of disagreement about the origins of the words. Some say that "bear" originated in a proverb that goes along...

Trading places. (History).
May 1, 2003... Ancient Greece had its emporion. In Rome, traders gathered at the collegium mercatorum. Today, just about every country has its stock exchange. These modern exchanges date from the trading centres that began in the 13th century in the...

Going public. (Initial Public Offering).
May 1, 2003... Let's suppose you've found a way of growing truffles indoors. The truffle we're talking about here is an edible fungus that is highly prized by gourmets. Usually, they grow wild on the roots of oak trees and are so rare, tasty, and expensive...

Gaining a piece of the action. (Trading).(how to buy shares in a company)(related article: Warren Buffett rules)
May 1, 2003... You've read in the business section of the newspaper about a company called Black Pearl Limited that's expected to do very well. You've got a little bit of money in the bank where it's earning interest of two percent a year, so you decide to...

Rolling the dice. (Strategies).(stock market indexes)
May 1, 2003... People connected with stock exchanges hate to hear their places of business compared with casinos or horse racing tracks. The reality is that there is a similarity. Stock exchanges have encouraged betting by introducing stock indexes, and then...

Playing it safe. (Bonds).(related articles: They're called junk bonds for a reason; Canadian funny money)
May 1, 2003... Stocks get all the press coverage, but bonds get most of the investment. Companies and governments issue bonds to raise money. In the case of governments, the bonds are issued to pay for building infrastructure--highways, hockey rinks,...

Crystal-ball investing. (Futures).(related article: The man who broke the bank in Singapore)
May 1, 2003... Just in case you think you're beginning to understand the operation of stock exchanges, clever people long ago invented futures. The first written record of a futures contract appears to come from Japan in 1690. People with money would pay...

Spreading the risk. (Mutual Funds).
May 1, 2003... What do you do if you know nothing about stock market investing, have no desire to learn, but still want to invest? You could pin the stock market listings up, throw a dart, and buy the stock the missile hits. A better choice is to put your...

As old as the markets. (Bubbles).(stock market players don't learn from history)
May 1, 2003... One thing we can learn from history is that stock market players don't learn from history. In 1711, the British government started up an enterprise called the South Sea Company. Its aim was to open up trade with South America. For eight...

The dot bomb. (Dot-com Bubble).
May 1, 2003... Back in 1841, Charles Mackay wrote a wonderful book. The title is Extraordinary Popular Delusions and the Madness of Crowds. The book is still in print (ISBN: 1586635581) and its first three chapters should be required reading for anybody...

There's one born every minute. (Swindles).(perpetrators of fraud deceived Bre-X investors)
May 1, 2003... Once upon a time, there was a small exploration company in Calgary. It was founded in 1988 and run by a man called David Walsh, a once-bankrupt stock promoter. In 1991, an investor with a high tolerance for risk could have bought shares in the...

The market cops. (Regulation).
May 1, 2003... Towards the end of the 17th century, there was a wave of stock exchange fraud in England. The swindles got so bad that the government set up a Parliamentary Commission to look into the problem and suggest solutions. The Commission reported in...