WSJ Columnist James Stewart who also writes for Smart Money had a few choice words to say today (31 May 2006) about how he picks stocks:
“The Enron story is a sobering reminder that management integrity is the foundation of financial success. Since the Enron fraud emerged, I have moved swiftly to sell stocks in companies where top management is implicated in wrongdoing, and especially where they refuse to accept responsibility. I’ll continue to recommend that you do the same.”
When it comes to CEO reputation, ethical conduct is almost always at the top. Whereas years ago integrity ranked lower in terms of what drives a CEO reputation, today it is the number one factor. In Europe, integrity does not usually rank as high as it does in the U.S. because ethical CEO behavior is expected. European companies have recently had their own scandals leading me to believe that integrity will soon top their charts too.
Stewart’s comment about accepting responsibility also rings true. CEOs are ultimately held responsible for company behavior. Accountability is the watchword for the times.
