UK high streets to lose 5,000 shops in next five years

June 4, 2013 12:04 am

UK high streets to lose 5,000 shops in next five years

By Hannah Kuchler

British high streets are forecast to lose another 5,000 shops in the next five years, as stores – caught between cautious consumers and competition from online and out-of-town rivals – lower the shutters for the last time.

Town centre shopping streets have lost 5 per cent of their outlets in the last two years, according to new research from the Local Data Company and the Saïd Business School. If this trend continues at the same rate, they project that high streets will shed another 13 per cent of stores by 2018. Read more of this post

Bond volatility threatens banks’ Value at Risk models

June 3, 2013 5:32 pm

Bond volatility threatens banks’ Value at Risk models

By Tracy Alloway in New York

Recent volatility in some of the world’s biggest bond markets could upend the complicated mathematical models that underpin large banks’ trading businesses, risk managers have warned.

Value at Risk,” or VaR models, have been a key part of banks’ risk management toolboxes for the past two decades, despite being heavily criticised for failing to predict the large losses incurred during the recent financial crisis. Read more of this post

EM assets lose favour on fears of slowing Fed QE

June 3, 2013 4:10 pm

EM assets lose favour on fears of slowing Fed QE

By Robin Wigglesworth and Alice Ross

Nowhere did recent hints that the US Federal Reserve could cut back its bond-buying in the near future reverberate as loudly as in emerging markets.

Although the bond and stock markets of developing countries have rallied over the past decade on the back of fundamental fiscal and economic improvements, gains have recently been supercharged by the aggressive ‘quantitative easing’ of western central banks – primarily the Fed. Read more of this post

Call to press fund managers over fees paid by pension trustees

June 3, 2013 11:34 pm

Call to press fund managers over fees paid by pension trustees

By Norma Cohen, Demography Correspondent

Fees collected by fund managers add up to a rising proportion of the returns they generate for pension trustees, with a vast divergence between what different investment groups charge for similar services, according to a report.

The fees paid by pension trustees have stayed flat while their returns have been subdued compared with past decades, adding to concern about the relative cost of fund managers’ services, says Lane Clark & Peacock, the actuarial consultants. Read more of this post

Emerging Market Currency Dominoes to Fall as SocGen Sees Rout

Emerging Market Dominoes to Fall as SocGen Sees Rout

The worst month in a year for emerging-market currencies will prove to be more than a momentary bout of weakness to strategists at firms from UBS AG to Societe Generale SA who see the Federal Reserve weaning investors off its extraordinary stimulus.

South Africa’s rand led declines among the 24 developing-nation currencies tracked by Bloomberg last month, tumbling 11.3 percent. JPMorgan Chase & Co.’s Emerging Markets Currency Index (FXJPEMCI) fell 3.3 percent, the most since it slipped 7 percent in May 2012. Only China’s yuan gained, rising 0.51 percent.

“For these emerging-market currencies, this is the beginning of a trend that perhaps is going to be longer and deeper in terms of a correction,” Tom Levinson, a currency strategist in London at ING Groep NV, the largest Dutch financial-services firm, said in a May 31 phone interview. Read more of this post

More Institutions Dispense with Hedge Funds As an Asset Class

More Institutions Dispense with Hedge Funds As an Asset Class

03 JUN 2013 – IMOGEN ROSE-SMITH

At its February meeting the board and the six-person investment committee of the Employees Retirement System of  Texas made a big decision. They voted to integrate hedge funds across the system’s $24.9 billion portfolio — using them within certain asset classes, like equities and fixed income — instead of simply lumping these investments into a separate allocation.

The Austin, Texas–based retirement fund joins a growing number of U.S. pension funds that are taking a more open approach to hedge fund investing, among them the Teacher Retirement System of Texas and the Virginia Retirement System. The practice is already quite common among foundations and endowments, including such respected university endowments as those of the University of Virginia and the University of   Texas at Austin. At University of   Texas Investment Management Co., CIO Bruce Zimmerman views asset allocation as a matrix, with the market along one axis and investment funds and their liquidity profiles along the other. For example, U.S. equities could include a long-short equity hedge fund, a long-only manager, an activist equity manager and private equity. Read more of this post

Equity Vesting and Managerial Myopia

Equity Vesting and Managerial Myopia

Alex Edmans London Business School – Institute of Finance and Accounting; University of Pennsylvania – The Wharton School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Vivian W. Fang University of Minnesota – Twin Cities – Department of Accounting

Katharina Lewellen Dartmouth College – Tuck School of Business

May 25, 2013

Abstract: 
This paper links the imminent vesting of a CEO’s equity to reductions in real investment. Existing studies measure the manager’s short-term concerns using the sensitivity of his equity to the stock price. However, in myopia theories, the driver of short-termism is not the magnitude of incentives but their horizon: equity will not induce myopia if it has a long vesting period. We use recent changes in compensation disclosure to introduce a new empirical measure that is tightly linked to theory – the stock-price sensitivity of shares and options vesting over the upcoming year. This sensitivity is determined by equity grants made several years prior, and thus unlikely to be driven by current investment opportunities. A one standard deviation increase in the sensitivity of imminently vesting equity is associated with a decline of 0.23% in the growth of R&D (scaled by total assets), 75% of the average R&D growth rate of 0.3%. Similar results hold when including advertising and capital expenditure. In addition, CEOs with imminently-vesting equity are significantly more likely to meet or beat analyst earnings forecasts by a narrow margin.

Will Xi Jinping’s ‘Chinese dream’ include the rule of law?

Will Xi Jinping’s ‘Chinese dream’ include the rule of law?

By Fred Hiatt, Monday, June 3, 8:19 AM

As he accepted the Communist Party’s designation to be China’s president and supreme military leader in March, Xi Jinping vowed “to achieve the Chinese dream of great rejuvenation of the Chinese nation.”

Xi’s speech to the National People’s Congress won plaudits from the press. “His crisp yet rich voice and frank yet resolute gaze revealed a power to invigorate the people,” the China People’s Daily reported.

But the speech left analysts guessing about what sort of rejuvenation — also translated as “revival” or “renaissance” — the new leader has in mind. Presumably President Obama will be looking for clues when he meets with Xi later this week in California. Read more of this post

How Samsung Got Big

How Samsung Got Big

CHRIS VELAZCO

Saturday, June 1st, 2013

The cellphones were stacked up high in the Gumi factory yard and more were coming out every minute. Phones, TVs, fax machines, and other gear shattered as it hit the concrete and Samsung CEO Kun-hee Lee and his board cracked the screens and cases with heavy hammers. Then they lit a bonfire and threw everything in.

The 2,000 workers began to cry. And still the hardware kept coming. The CEO was disgusted by the low quality product coming out of his factories in the early 1990s and, in a blaze of anger, ordered it all destroyed.

In all, something like $50 million worth of hardware burned on one day in 1995 when Samsung hoisted its “Quality First” banner and began its slow march towards world domination in earnest. Samsung Electronics emerged from those ashes a very different company, but the road leading to that cleansing fire was a long one. Read more of this post

Coutts Asia CIO bearish on Singapore property. Investors appear to be “in denial” about the risks over residential property in Hong Kong and Singapore

Coutts Asia CIO bearish on Singapore property

SINGAPORE — Investors appear to be “in denial” about the risks over residential property in Hong Kong and Singapore and that a slowdown in purchases will mean lower prices, private bank Coutts’ chief investment officer for Asia and the Middle East said today (June 3).

BY 2 HOURS 11 MIN AGO

SINGAPORE — Investors appear to be “in denial” about the risks over residential property in Hong Kong and Singapore and that a slowdown in purchases will mean lower prices, private bank Coutts’ chief investment officer for Asia and the Middle East said today (June 3).

“You get that fuzzy period when everyone tells you everything is fine until the point when the bank tells you (that) you must sell or you face a cash-flow problem,” Mr Gary Dugan told the Reuters Wealth Management Summit in Singapore. Read more of this post

Companies in Wenzhou, China’s entrepreneurial hub and epicenter of the underground banking sector, struggle to survive

Companies in Wenzhou struggle to survive

Staff Reporter

2013-06-02

Wenzhou City Sentai Environmental Protection Equipment has qualified for bankruptcy protection amid a growing wave of struggling companies in Wenzhou in eastern China’s Zhejiang province — the country’s entrepreneurial hub and epicenter of the underground banking sector — reports Guangzhou’s Southern Weekly.

The Wenzhou municipal party committee approved the application and under its restructuring and bankruptcy protection program, loss-making companies can continue to run their businesses without being targeted by debt collectors. It also means that the court cannot order the sale of the company’s assets, aiming to help struggling companies obtain financial aid and pay their dues through a legal process. Read more of this post

Conquering Global Markets: Secrets from the World’s Most Successful Multinationals

Conquering Global Markets: Secrets from the World’s Most Successful Multinationals [Hardcover]

Nancy A. Hubbard (Author)

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Release date: April 9, 2013 | ISBN-10: 0230293557 | ISBN-13: 978-0230293557

Conquering Global Markets offers assessments of the issues, statistics, cases, and best practices of mergers, acquisitions, joint ventures and alliances throughout the world. Using information gleaned interviews with CEOs, the book provides insights into making global M&As successful. Read more of this post

Risk Management Breakdown at AXA Rosenberg: The Curious Case of a Quant Manager Trusted Too Much

Risk Management Breakdown at AXA Rosenberg: The Curious Case of a Quant Manager Trusted Too Much

David F. Larcker Stanford University – Graduate School of Business

Brian Tayan Stanford University – Graduate School of Business

May 30, 2013
Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance and Leadership No. CGRP- 33

Abstract: 
All companies face challenges designing a governance system that works best for their particular situation and structure. Even the owners of privately held companies sometimes struggle with issues of separation and control. The challenges can be particularly acute when a company founder has considerable influence over the organization and its culture, and third-party investors have been brought in to share ownership. We examine the interesting case of AXA Rosenberg, a joint venture investment management firm founded and run by legendary finance professor Barr Rosenberg. Although successful for a time, the firm eventually collapsed due to a failure in risk management. We examine the governance structure, unique personalities, and series of events that led to the breakdown of the firm, and the SEC investigation that resulted in Barr Rosenberg’s lifetime ban from the securities industry. We ask: Is it possible for a board to monitor a renowned executive with extremely specialized knowledge? How can the board satisfy itself that risks are appropriately known and monitored? How does an executive’s personality affect a company’s risk management practices?

Do Private Equity Funds Game Returns? We find evidence of managers boosting reported NAVs during times that fundraising activity is likely to occur

Do Private Equity Funds Game Returns?

Gregory W. Brown University of North Carolina (UNC) at Chapel Hill – Finance Area

Oleg Gredil University of North Carolina (UNC) at Chapel Hill – Kenan-Flagler Business School

Steven N. Kaplan University of Chicago – Booth School of Business; National Bureau of Economic Research (NBER)

May 29, 2013

Abstract: 
By their nature, private equity funds hold assets that are hard to value. This uncertainty in asset valuation gives rise to the potential for fund managers to manipulate reported net asset values (NAVs). Managers may have an incentive to game valuations in the short-run if returns on existing funds are used by investors to make decisions about commitments to subsequent funds managed by the same firm. Using a large dataset of buyout and venture funds, we test for the presence of reported NAV manipulation. We find evidence of managers boosting reported NAVs during times that fundraising activity is likely to occur. However, this behavior is mostly limited to firms that are subsequently unsuccessful at raising a next fund which suggests that investors see through the manipulation. In contrast, we find evidence that top-performing funds under-report returns. This conservatism is consistent with these firms insuring against future bad luck that could make them appear as though they are NAV manipulators. Our results are robust to a variety of specifications and alternative explanations.

Politically Connected Firms and Earnings Informativeness in the Controlling Versus Minority Shareholders Context

Politically Connected Firms and Earnings Informativeness in the Controlling Versus Minority Shareholders Context

Carolina Bona Sánchez University of Las Palmas de Gran Canaria

Jerónimo Pérez Alemán Universidad de Las Palmas de Gran Canaria

Domingo J. Santana Martin University of Las Palmas de Gran Canaria

May 25, 2013

Abstract: 
Research Question/Issue: Focusing on an environment where the principal agency conflict steams from the divergence of interests between dominant owners and minority shareholders, and where the legal system provides weak protection to external investors, we analyze the effect of firms’ political ties on earnings informativeness. We also address a question that has not been considered in previous research, namely, the impact of the level of divergence between the dominant owner’s voting and cash flow rights on earnings informativeness for politically connected firms.
Research Findings/Insights: We find that the presence of politicians on the board negatively affects earnings informativeness. We also find a positive impact of the divergence between the dominant owner’s voting and cash flow rights on the informativeness of accounting earnings in politically connected firms.
Theoretical/Academic Implications: We show that the relationship between political ties and earnings informativeness is explained by an information effect, whereby politicians and shareholders are interested in providing as little information to the market as possible. Additionally, we show that the positive relationship between divergence and earnings informativeness in politically connected firms is explained by an alignment effect, whereby the existence of political ties reduces the dominant owner’s incentive to expropriate minority shareholders’ wealth, thus increasing earnings informativeness.
Practitioner/Policy Implications: The results of our study may be useful for regulators interested in increasing transparency in order to promote a more efficient allocation of resources. Similarly, the results may be useful to investors, financial analysts and auditors, as they provide evidence of the importance of considering specific features of the corporate governance system when assessing the credibility of accounting information.

How Do Companies Go Global: Choices and Issues between Entry Strategies

How Do Companies Go Global: Choices and Issues between Entry Strategies

Nancy Hubbard Goucher College – Department of Business Management

April 9, 2013
Conquering Global Markets: Secrets from the World’s Most Successful Multinationals, pp. 40-58, Nancy Hubbard, Palgrave Macmillan, 2013.

Abstract: 
This chapter is from the book “Conquering Global Markets: Secrets from the World’s Most Successful Multinationals” which presents the findings of one of the largest research projects undertaken of its type. Senior executives from fifty multinational companies from sixteen countries were interviewed to understand the issues, risks, challenges and key success factors of how companies have globalized using greenfield investment, joint ventures and alliances as well as mergers and acquisitions. This chapter discusses the historical routes and factors influencing the market entry mode choices made. Historical patterns of internationalization are discussed including the Uppsala Theory, networking theory, “born global”, and early internationalizer theories. A fifth pattern is identified and discussed, the “opportunistic globalizer”. Those interviewed for the research indicated that four factors heavily influenced their choice of entry mode. Those factors were control, speed, local market awareness, and resource allocation all of which are discussed in depth. Further factors that can influence market entry choice are also discussed and include: openness to inward investment, corruption, competition, risk markets, and intellectual property rights are also discussed. Quotes from participants are used throughout the chapter and a case study highlighting the expansion profile of Teva Pharmaceuticals is summarized.

CEO Turnover, Earnings Management, & Family Control

CEO Turnover, Earnings Management, & Family Control

John Manuel Barrios Jr.University of Miami

Daniele Macciocchi LUISS Guido Carli University

May 22, 2013

Abstract: 
The aim of this paper is to study the relation between earnings management and CEO turnover in the context of family firms. Specifically, we investigate whether the probability of the CEO being dismissed increase with the level of earnings management and if this relation is the same in family controlled firms. Using a sample of 221 Italian family and non-family firms between 2006-2010, we find that there is a positive association between earnings management and CEO turnover with non-family firms driving the results. Additionally, we find that in family firms the likelihood of CEO turnover is even lower when a member of the controlling family acts as CEO. Results suggest that family and non-family firms engage in the same level of earnings management, thus supporting the existence of two different corporate governance systems. This study provides empirical support for the understandings of corporate governance mechanisms in retaining and punishing managers’ opportunistic behaviors, and it provides evidence about the different corporate governance systems between family and non-family controlled companies. The issue is relevant because it has never been tackled from an empirical perspective in the family firms’ context, which presents some important peculiarities when compared to other more widely studied corporate governance systems. These results offer insight for policy makers and investors operating in the context of family controlled companies as they point to the diverse effects of corporate governance policies.

The Media and Mispricing: The Role of the Business Press in the Pricing of Accounting Information

The Media and Mispricing: The Role of the Business Press in the Pricing of Accounting Information

Michael S. Drake Brigham Young University – Marriott School

Nicholas M. Guest Massachusetts Institute of Technology (MIT) – Sloan School of Management

Brady J. Twedt Indiana University – Kelley School of Business

May 1, 2013

Abstract: 
This study investigates the role of the business press in the pricing of accounting information. Using a comprehensive dataset of more than 111,000 earnings-related business press articles published from 2000-2010, we find that press coverage of the current period earnings announcement mitigates cash flow mispricing, but has a negligible effect on accrual mispricing. We investigate whether this impact is driven by the press disseminating the information more broadly or by providing content that helps investors understand the implications of accounting information. We find support for the information dissemination role only. Taken together, our results suggest that the business press plays an important role in facilitating the market’s ability to efficiently impound accounting information into stock prices, and we provide insights into the role of the business press as an information intermediary in capital markets.

Identifying Unintentional Error in Restatement Disclosures

Identifying Unintentional Error in Restatement Disclosures

Louise Hayes University of Waterloo – School of Accounting and Finance

May 1, 2013

Abstract: 
Research attention is frequently focused on fraud and earnings management; however, unintentional errors in audited financial statements of public companies occur frequently. Currently, archival study of unintentional error is hampered by the lack of a refined error proxy. The purpose of this study is to develop a proxy for restatements that correct unintentional errors. Using an automated text search, I discover language asserting or implying lack of intent in 751 restatement announcements disclosed after enactment of the Sarbanes-Oxley Act of 2002 (SOX). I validate this proxy for restatements that correct unintentional error by analyzing differences in restatement characteristics and earning quality measures between these 751 restatements and 127 restatements that correct intentional misstatements which I identify by reading SEC Accounting and Auditing Enforcement Releases (AAERs). I find, relative to restatements that correct intentional misstatements, that the proxy for restatements that correct unintentional error is associated with proportionately fewer revenue recognition issues, less positive accruals, less income persistence, and a lower likelihood of meeting and beating analysts’ forecasts by a small amount. Future study of the associations between restatements that correct unintentional error and the expertise and incentives of CFOs, CEOs, audit committee members and auditors may lead to a more nuanced understanding of reporting quality. Thus, this validated proxy has the potential to contribute to future research and improvements in audit, internal control, and governance mechanisms.

Be Like Water: The Philosophy and Origin of Bruce Lee’s Famous Metaphor for Resilience

Be Like Water: The Philosophy and Origin of Bruce Lee’s Famous Metaphor for Resilience

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Bruce Lee (right) with his only formal martial art instructor, Yip Man

“In order to control myself I must first accept myself by going with and not against my nature.”

With his singular blend of physical prowess and metaphysical wisdom, coupled with his tragic untimely death, legendary Chinese-American martial artist, philosopher, and filmmaker Bruce Lee (1940-1973) is one of those rare cultural icons whose ethos and appeal remain timeless, attracting generation after generation of devotees. Inspired by the core principles of Wing Chun, the ancient Chinese conceptual martial art, which he learned from his only formal martial arts teacher, Yip Man, between the ages of thirteen and eighteen. When he left Hong Kong in 1959, Lee adapted Wing Chun into his own version, Jun Fan Gung Fu – literal translation: Bruce Lee’s Kung Fu – and popularized it in America. In 1971, at the peak of his career, Lee starred in four episodes of the short-lived TV series Longstreet. In one of them, he delivered his most oft-cited metaphor for the philosophy of Gung Fu: But the famed snippet belies the full dimensionality of the metaphor and says nothing about how Lee arrived at it. Luckily, in Bruce Lee: Artist of Life (public library) – a compendium of his never-before-published private letters, notes, and poems, offering unprecedented insight into his philosophy on life and his convictions about martial arts, love, and parenthood – Lee traces the thinking that originated his famous metaphor, which came after a period of frustration with his inability to master “the art of detachment” that Yip Man was trying to impart on him. Lee writes: When my acute self-consciousness grew to what the psychologists refer to as the “double-bind” type, my instructor would again approach me and say, “Loong, preserve yourself by following the natural bends of things and don’t interfere. Remember never to assert yourself against nature; never be in frontal opposition to any problems, but control it by swinging with it. Don’t practice this week: Go home and think about it.”

And so he did, spending the following week at home:

After spending many hours meditating and practicing, I gave up and went sailing alone in a junk. On the sea I thought of all my past training and got mad at myself and punched the water! Right then – at that moment – a thought suddenly struck me; was not this water the very essence of gung fu? Hadn’t this water just now illustrated to me the principle of gung fu? I struck it but it did not suffer hurt. Again I struck it with all of my might – yet it was not wounded! I then tried to grasp a handful of it but this proved impossible. This water, the softest substance in the world, which could be contained in the smallest jar, only seemed weak. In reality, it could penetrate the hardest substance in the world. That was it! I wanted to be like the nature of water. Suddenly a bird flew by and cast its reflection on the water. Right then I was absorbing myself with the lesson of the water, another mystic sense of hidden meaning revealed itself to me; should not the thoughts and emotions I had when in front of an opponent pass like the reflection of the birds flying over the water? This was exactly what Professor Yip meant by being detached – not being without emotion or feeling, but being one in whom feeling was not sticky or blocked. Therefore in order to control myself I must first accept myself by going with and not against my nature.

Quoting from Lao Tzu’s famous teachings, Lee writes:

The natural phenomenon which the gung fu man sees as being the closest resemblance to wu wei [the principle of spontaneous action governed by the mind and not the senses] is water: Nothing is weaker than water, But when it attacks something hard Or resistant, then nothing withstands it, And nothing will alter its way. The above passages from the Tao Te Ching illustrate to us the nature of water: Water is so fine that it is impossible to grasp a handful of it; strike it, yet it does not suffer hurt; stab it, and it is not wounded; sever it, yet it is not divided. It has no shape of its own but molds itself to the receptacle that contains it. When heated to the state of steam it is invisible but has enough power to split the earth itself. When frozen it crystallizes into a mighty rock. First it is turbulent like Niagara Falls, and then calm like a still pond, fearful like a torrent, and refreshing like a spring on a hot summer’s day. So is the principle of wu wei: The rivers and seas are lords of a hundred valleys. This is because their strength is in lowliness; they are kings of them all. So it is that the perfect master wishing to lead them, he follows. Thus, though he is above them, he follows. Thus, though he is above them, men do not feel him to be an injury. And since he will not strive, none strive with him.

Apple’s Tim Cook: You look for people that are not political. People that are not bureaucrats. People who care enough that they have an idea at 11 at night and they want to call and talk to you about it.

In One Of His Most Revealing Quotes, Tim Cook Explains His Strategy For Running Apple

Jay Yarow | Jun. 2, 2013, 9:07 AM | 8,495 | 7

Tim Cook gave one of his most revealing quotes to date about how he’s running Apple in an interview at Duke’s Fuqua School of Business. Cook got his MBA at Duke 25 years ago. He was on campus for a reunion and did a one hour interview with Fuqua’s Dean. Duke posted a clip from the interview to YouTube. In it, Cook answers a question about what he looks for when trying to get employees who collaborate. Cook has done a lot of interviews since being CEO. Much of the time it with the business press, or Wall Street analysts. As a result, Cook is normally pretty guarded in his answers. In this short answer, though, Cook is somehow more revealing than normal. Maybe we’re reading into it too much, but swe think it explains his entire philosophy about running Apple and how he’s completely different than Steve Jobs. A lot of people have asked him to compare himself to Jobs. For the most part he’s resisted. In this instance, he accidentally tells us. Here’s the question and answer, with our comments following:

What qualities do you look for in terms of what you think will produce effective collaboration?And what’s your role as CEO in fostering that kind of collaboration?

You look for people that are not political. People that are not bureaucrats. People that can privately celebrate the achievement, but not care if their name that is in the one in the lights. There are greater reasons to do things. You look for wicked smart people. You look for people who appreciate different points of view. People who care enough that they have an idea at 11 at night and they want to call and talk to you about it. Because they’re so excited about it, they want to push the idea further. And that they believe that somebody can help them push the idea another step instead of them doing everything themselves. Read more of this post

Creating the Best Workplace on Earth by allowing people to do their best work; people will not follow a leader they feel is inauthentic

Creating the Best Workplace on Earth

by Rob Goffee and Gareth Jones

Suppose you want to design the best company on earth to work for. What would it be like? For three years we’ve been investigating this question by asking hundreds of executives in surveys and in seminars all over the world to describe their ideal organization. This mission arose from our research into the relationship between authenticity and effective leadership. Simply put, people will not follow a leader they feel is inauthentic. But the executives we questioned made it clear that to be authentic, they needed to work for an authentic organization.

What did they mean? Many of their answers were highly specific, of course. But underlying the differences of circumstance, industry, and individual ambition we found six common imperatives. Together they describe an organization that operates at its fullest potential by allowing people to do their best work. Read more of this post

Singapore wealth manager David Chong, the colourful founder and chairman of Portcullis TrustNet, under fire amid crackdown on offshore tax evasion

A Singapore wealth manager under fire amid crackdown

Monday, Jun 03, 2013

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SINGAPORE – The email landed at a tough time for David Chong, the colourful founder and chairman of Portcullis TrustNet, one of Asia’s biggest wealth advisory companies.

By threatening to publish offshore companies and trusts held by his clients, it hit a raw nerve at a company whose customers rely on its discretion. But it also came as the wealth management industry faces a wave of global scrutiny from regulators trying to weed out tax dodgers.

The email from a group of investigative journalists said it wanted to expose how the rich compound the world’s economic problems by using offshore tax loopholes to minimise tax payments. Read more of this post

Tax haven allegations dog rich and famous Koreans

2013-06-02 19:10

Tax haven allegations dog rich and famous

Authorities join to crack down on offshore tax evasion
By Kim Tae-jong

Lists disclosed by a local online news outlet have stirred huge controversy, as they accused businessmen and their family members, mostly well-known to the public, of setting up paper companies or accounts in offshore tax havens in an apparent move to create slush funds or avoid paying due taxes.
Newstapa, the Korea Center for Investigative Journalism (KCIJ), came up with the lists after it analyzed data jointly with the International Consortium of Investigative Journalists (ICIJ) and has made a series of announcements. Read more of this post

Risk-Averse Culture Infects U.S. Workers, Entrepreneurs

Updated June 2, 2013, 10:04 p.m. ET

Risk-Averse Culture Infects U.S. Workers, Entrepreneurs

By BEN CASSELMAN

P1-BL745_Risk_G_20130602181808

Americans have long taken pride on their willingness to bet it all on a dream. But that risk-taking spirit appears to be fading.

Three long-running trends suggest the U.S. economy has turned soft on risk: Companies add jobs more slowly, even in good times. Investors put less money into new ventures. And, more broadly, Americans start fewer businesses and are less inclined to change jobs or move for new opportunities.

The changes reflect broader, more permanent shifts, including an aging population and the new dominance of large corporations in many industries. They also may help explain the increasingly sluggish economic recoveries after the past three recessions, experts said. Read more of this post

Dividend Stocks Fall Victim to Fed; Utilities, REITs, Other Sectors That Benefited From Aggressive Bond-Buying Program Take a Hit

Updated June 2, 2013, 4:55 p.m. ET

Dividend Stocks Fall Victim to Fed

Utilities, REITs, Other Sectors That Benefited From Aggressive Bond-Buying Program Take a Hit

By JONATHAN CHENG

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Stock investors are getting a taste of what could be in store with a sustained rise in bond yields.

A month of sharply climbing U.S. Treasury yields culminated last week in an abrupt selloff among stocks that had been posting big gains thanks to demand from income-hungry investors.

Hardest hit were utilities, telecommunications stocks and real-estate investment trusts, all of which had benefited from the Federal Reserve keeping government-bond yields at rock-bottom levels. The Fed’s extraordinary stimulus policies, which have pumped billions of dollars into the financial markets, had caused investors to seek out income in riskier fare, such as stocks that pay high dividends. Read more of this post

Seoul’s Defector Girl Boxer Stars in Rare Triumph for Refugees; father abandoned a successful trading business, a 330 sqm house and a chauffeur-driven car to give Choi the freedom to pursue her talent

Seoul’s Defector Girl Boxer Stars in Rare Triumph for Refugees

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Choi Hyun Mi gathered with 17 other South Korean citizens on the evening of Feb. 24 as a full moon rose above Seoul. President Park Geun Hye chose the 22-year-old woman along with the others to celebrate the start of her five years as the nation’s 11th president. At midnight, as Park’s term began, they rang the iconic Bosingak bell.

For Choi, better known as “Defector Girl Boxer,” it was another milestone in her family’s escape from North Korea in 2004, Bloomberg Markets magazine will report in its July issue. Her father, Choi Young Choon, abandoned a successful trading business, a 330-square-meter (3,500-square-foot) house in the capital, Pyongyang, and a chauffeur-driven car to give Choi the freedom to pursue her talent. Read more of this post

Short Seller Muddy Waters Seeks Silicon Valley ‘Pretenders’

June 2, 2013, 7:54 p.m. ET

Short Seller Seeks Valley ‘Pretenders’

By JULIET CHUNG

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Creative hairstyles, fake names and shoe-leather sleuthing transformed Carson Block from a no-name expatriate in China into a celebrity short seller.

But will such gambits translate elsewhere?

From an office in California at a location he won’t disclose, the 37-year-old American and his firm Muddy Waters LLC are changing their sights after wreaking havoc at Chinese companies. Last month, he told a Bellagio hotel ballroom packed with investors about his bet against the debt of U.K. bank Standard Chartered PLC.STAN.LN -1.51%

It was the first time Mr. Block had spoken out against a company based outside Asia. And his voice was heard: The cost of the debt protection Mr. Block said he was buying rose 17% in the following two trading days. Read more of this post

Muddy Waters to Jupiter Seek Profit as China Risk Rises

Muddy Waters to Jupiter Seek Profit as Risk Rises: China Credit

China’s bond risk rose the most in a year in May and investors from Muddy Waters LLC’s Carson Block to Jupiter Asset Management Ltd. are seeking to profit from an economic slowdown as policy makers rein in debt. The cost of insuring sovereign bonds against non-payment rose 15 basis points in May to an eight-month high of 86, as economists queried discrepancies in the nation’s data releases. Credit-default swaps on State Bank of India (SBIN), a proxy for the nation, fell 6 basis points last month, according to CMA, which compiles data in the privately negotiated market. Concern that loans will sour have escalated as falling commodity prices point to flagging growth and inflated export data suggest the economy isn’t as strong as official figures indicate. Varying estimates over the scale of borrowing by local governments and the shadow banking system used to bypass loan curbs compound the risk, according to Jupiter Asset.

“The problem is the lack of transparency,” said Ariel Bezalel, who helps oversee about $44 billion as a portfolio manager at the fund manager in London. “No one really seems to know or have a good handle on the shadow banking system in terms of how large, how severe the non-performing loans situation is.” Read more of this post

Foreign luxury brands desert Shanghai’s Bund as glamor fades

Foreign luxury brands desert Shanghai’s Bund as glamor fades

Staff Reporter

2013-06-03

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The Bund in Shanghai. China’s economy has reached a critical point where the country must find a new direction to maintain progress. (File photo/Xinhua)

The flagship store of Italian designer Giorgio Armani in Shanghai closed earlier this year, ending its decade-long operations on the Bund, the most visited tourist destination in the city, the Chinese-language Global Entrepreneur Magazine reports.

The Bund is home to 52 historic buildings of various Western, Eastern and fusion architectural styles. The closed Giorgio Armani store was located at the Bund No. 3, a 97-year-old building that once housed the British Mercantile Bank and was remodeled in 2004 into a high-end shopping center by American architect Michael Graves. Read more of this post