By: GZ on Lunedì 04 Febbraio 2002 10:47
il pezzo di apertura del WSJ Europa di stamattina suggerisce che il motivo
per cui non si vedono ancora casi di Enron
in Europa è solo perchè le autorità di controllo
delle borse e la stampa finanziaria sono meno attive che in America
e molte società sono controllate o influenzate dallo stato
per cui non c'è la spinta a indagare a fondo
E' un pezzo che non fa nomi, ma non da un senso di sicurezza
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Europe's Immunity to Enronitis
May Be Little More Than Illusion
By JESSE EISINGER
Staff Reporter of THE WALL STREET JOURNAL
Enronitis has spread to Europe. But where are Europe's Enrons?
Or Waste Managements, Cendants, Sunbeams, and so on?
The list of accounting disasters and outright frauds in the U.S. is long and filled with once-hallowed names of Corporate America. But here, smaller and fewer debacles have bedeviled the markets in recent years -- Lernout & Hauspie, EM.TV, Baan, tiny Neuer Markt companies.
Why no bigger fish?
Not surprisingly, there are the pro- and anti-European views on this. Let's start with the pro-Europe reasons.
1. We had our disasters and now our accounting standards are tighter
People in the U.K., in particular, cite the late 1980s and early 1990s, the time of Robert Maxwell's raid on his pensioners' money and the great accounting fraud Polly Peck, as their catalyst for cleanup. In response, the U.K. tightened its accounting and securities laws, particularly in the area of off-balance-sheet transactions -- just the thing Enron executives engaged in to get debt off the company balance sheet, generate revenue and enrich themselves.
The flaw in this thinking is that this isn't particularly true in continental Europe. Those markets haven't gone through periods where a raft of frauds shook investor confidence (expect arguably on the Neuer Markt, but that was small potatoes).
And why would the late 1980s frauds have been the ones to make the U.K. market clean? The City has gone through its share of accounting scandals down through history. Why didn't the reforms after, say, the South Sea bubble prevent future debacles?
2. We don't have the obsession with highfliers.
The higher you fly, the more tempted you are to find ways of staying up there. But Europe's highflying companies just don't soar into the stratosphere.
Well, it is true that the dot-com bubble puffed itself up more hotly and stretched itself more thinly in the U.S.; that gave rise to numerous accounting wheezes. One favorite was revenue-barter transactions in which two companies agreed, for instance, to buy advertising space from each other, resulting in rising revenue. This had, of course, no net economic effect.
The flaw in this argument is that the bubble was great in Europe, inflating not so much dot-coms but telecom companies and telecom-equipment makers. The dot-com bubble was nothing compared with the telecom bubble. Global Crossing and Lucent in the U.S. have had revenue-recognition concerns. Why haven't we seen exposes of Europe's former bubble stocks?
3. We don't have the short-term outlook.
Ah, this old European chestnut. Here companies aren't slaves to their investors' whims, goes this argument. In the U.S., the selfish and myopic public demands quarterly updates on how companies are doing and constant gratification of sales updates, data, filings and estimates. All that disclosure and servicing of the public markets takes away executive attention from the business and drives them to managing the numbers and hitting targets, come hell or highwater. And thus, some managers commit fraud.
Malarky. Europe's managers are experts in creating pools of money to dip into to make earnings predictable. No place has better experts in smoothing earnings. Perhaps they are not driven to hit short-term targets, but European companies certainly manage toward goals that investors expect them to hit. In that environment, one would expect some managers to go overboard, but we don't see the splashes.
So, the pro-European arguments have limitations. What about those of people who are critical of European markets?
1. The press isn't as aggressive.
The local business media often provide boosterish, unsophisticated coverage. The Belgian press rallied around Lernout & Hauspie until far too late in the game, not understanding the speech-software company's complex web of related-party dealings and how they boosted reported results. Companies are covered with kid gloves in Europe by local media because these companies often are national champions, their representatives on the international stage. That means they can get away with a lot.
The flaw in this argument is that it was the U.S. press that boosted the New Economy myth and Enron in particular. For cheerleading, it's hard to find louder rah-rahs than those from the American media. When the disaster strikes, the U.S. press does a good job of crawling over the battlefield and describing it. But it does just as lousy a job of anticipating the war as Europe's scribes.
2. There's no recession here.
Birds of a feather fly high together, until they are swept into the engine of an oncoming jet.
Enron could have gone on for years, had the markets in which it was trying to enter not dried up, causing it to take a seemingly innocuous writeoff of shareholder equity. That led to the further revelations of massive accounting problems. In the end, companies need cash – either from their business or the capital markets. In a recession, it's harder to get cash, which puts a stop to plenty of games.
Over here, the recession hasn't been particularly deep. In the U.S., it has been fierce in certain sectors of the economy, which has arguably outed some accounting scandals.
The flaw in this argument is that the U.S. was rife with accounting problems during the bull market; Cendant and Sunbeam blew up then. A recession helps reveal problems but isn't necessary.
3. We don't see them.
Europe's capital-market regulators have great capacity for sleep. By and large, they don't require company insiders to disclose when they buy and sell shares. Insider-trading cases are rarer than Italian restaurants in Paris.
Europe's watchdogs require few filings. These are rarely easily accessible. In the U.S. companies file regulatory statements each quarter and between quarterly filings when material events happen. And the filings are freely available on the Internet. In Europe, these filings happen once a year.
And companies are particularly close to governments here, since many of the major companies were privatized. The governments are highly invested (literally) in the idea of privatization, which may lead them to cover up accounting problems or quietly bail out companies with serious problems.
The logical assumption: Europe's accounting frauds are out there, but we can't see them. Of course, this raises the question of whether that's a good thing. If everything is quietly swept under the rug, then investors don't lose money and workers stay in the their jobs and nobody is the worse off. This logic seems highly dubious. More likely is that the problems affect the companies and capital markets in subtle ways, slowly eroding investor confidence over time and making it harder for the capital markets to function fluidly.
The answer to why there isn't more Enronitis in Europe is probably a combination of all of these factors. But the last answer seems most convincing to Heard in Europe. And that should put a scare into investors.
