All GLG News Analyses Filed Under: Financial Forecasting & Analysis

Needed: More Accountants Serving as “Financial Experts” on Audit Committees

September 26, 2007

Analysis by: GLG Expert Contributor

Analysis of:Audit Committees Embracing Accountants | www.cfo.com

A recent study investigating the number of accountants serving on audit committees of public companies found the percentage of committees with at least one accountant nearly doubled from 21% in 2002 to 40% in 2006. A key factor to this increasing trend is attributed to an SEC rule in 2003 requiring companies to disclose specific information on Board members designated as “audit committee financial experts.” While it’s encouraging to see the increasing trend of accountants serving on audit committees, I believe the number of qualified financial experts serving on audit committees of public companies is still way too low. Importantly, this is a relevant issue for investors to consider and represents one of the many “data points” that factor into the assessment of a company’s corporate governance practices - as well as with the assessment of earnings quality.

Robert KempProfessorUniversity of Virginia - CC

Beware the Cost of Pension Possibilities

September 26, 2007

Analysis of:Democrats to Push Bill to Protect Workers | online.wsj.com

Unfunded pension and OPEB benefits (e.g., Other Post Retirement Benefits - health care) have little or no priority of claims in bankruptcy, in relationship to other forms of debt.  As political currents change, the possibility of radically changing this situation also changes.  (See source article.)  If pension and OPEB liabilities gain higher priority in bankruptcy, the imbedded risk in other forms of debt will increase.  This increase in risk will ultimately force higher required rates of return and thus lower values. Financial analysts need to be aware of this when pricing such debt and related equity.  

Made In China Completely

September 20, 2007

Analysis by: GLG Expert Contributor

Analysis of:China Rushes Upmarket | www.businessweek.com

China wants to move to knowledge economy instead of low cost industries. China facing stringent rules on safety for their products. China sets law and cut subsidies on high polluting and low technology products. China wants to made their own products instead of low end products.

Robert KempProfessorUniversity of Virginia - CC

Pensions and OPEB - Make Sure You Know "All" The Risks

September 13, 2007

Analysis of:Pension Investment Risk Disclosure - What You Don't Know | news.glgroup.com

Dr. Mangieor's analysis is insightful and correct. Investors need better pension/OPEB disclosures regarding risks. However all the risk within a pension scheme must be recognized, understood, and managed. Too many times the risk within a pension/OPEB scheme is viewed as having a single dimension: default and market risk. This is problematic.

Robert KempProfessorUniversity of Virginia - CC

The Auto Industry - It's Simple Risk and Return Regarding Health Care Issues

September 13, 2007

Analysis of:UAW Talks Get Push | online.wsj.com

US auto manufacturers face a huge dilemma.  To be competitive with Toyota and other non-US auto manufacturers, they must lower health care costs and unfunded liabilities.  (This is well documented in the referenced article.)  What is interesting is the impact on value from both the the firms' perspective and the UAW's perspective.

Another step to become world biggest company for ICBC

September 5, 2007

Analysis by: GLG Expert Contributor

Analysis of:ICBC to buy 80% stake in Seng Heng Bank | www.ft.com

1)over liquidity in banking system forced ICBC to look for high profit investment elsewhere. 2)Seng Heng Bank will profitable from the Macao booming of property and gaming business. 3)Seng Heng Bank holds the valuable accounts of the wealthy individuals in Macao. 4)China has to let the capital out to curb inflation.

Robert KempProfessorUniversity of Virginia - CC

Pensions - Management is responding to economic realities

September 4, 2007

Analysis of:Rank to consider sale of its pension scheme | news.yahoo.com

The key implications of Rank Group's actions are threefold. First, it is harder for companies to borrow from employees with off balance sheet pension schemes.  Disclosure requirements have increased (i.e., FASB). Second, pensions have always been a too-often neglected risk dimension in corporate valuation.  With more disclosure, this risk dimension is being recognized, appreciated, and used in pricing value. Last, the reasons for a company to retain influence over its pension fund are diminishing.  Regulation (e.g., Pension Protection Act) is requiring more discipline in the assumptions used to evaluate pension obligations and the funding of pension obligations.

Robert KempProfessorUniversity of Virginia - CC

The Need to Balance Return and Risk: Wake Up Call for Pension Funds

August 31, 2007

Analysis of:Pension Fund Managers Rethink Their Love of Hedge Funds | online.wsj.com

Too often the managers of pension funds use an objective of maximizing return.  However in doing so, they neglect risk.  In the volatile markets of today, the focus on returns, while neglecting risk, is causing problems.  It's time to stake a step back and rethink the management of pension funds. 

China should worry about over development and corruption instead of inflation

August 22, 2007

Analysis by: GLG Expert Contributor

Analysis of:China's Worrisome Inflation Data | www.businessweek.com

China investors move from food production to property development and share market. Reduce money supply in the financial system by increase interest rate, forming national trust fund and promote health insurance. Give incentive to food production and limit the property development in farm area. Promote remote area development will attract people to live there.

Industrial Bank carefully follow the loan growth trend

August 22, 2007

Analysis by: GLG Expert Contributor

Analysis of:Industrial Bank Plans Record $6.5 Billion Bond Sale | www.bloomberg.com

Industrial Bank take more caution way to rise funding by issued bond. Industrial Bank increase branches by acquisition of small bank and joint venture with foreign bank. China will approve Industrial Bank's bond to prevent overheat of the share market. The prudence way of operation make Industrial Bank the best performer bank.

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