US Lawmakers Act Against Tax Inversions: Implications for Corporate Governance
The Tax Cuts and Jobs Act (“TCJA”), which came into effect on 1 January 2018, marks one of the most substantial reforms to the United States tax code in more than 30 years. In response to growing public pressure, US lawmakers have enacted wide-reaching tax reforms to curb the trend of tax inversions. These tax arrangements involve the re-incorporation of US companies abroad, enabling them to avoid US laws and domestic tax rates. This blog will examine how a corporate inversion – the most common type of tax move – erodes the US tax base and increases investment risk.
Auditor Independence: Lessons from KPMG South Africa & Other Scandals
A good reputation is arguably one of an audit firm’s most valuable assets. But when auditor independence is compromised, it can have very negative consequences for the relevant stakeholders and, in extreme cases, it can even undermine the public’s trust in a country’s financial system. Recent controversies at Tesco and BT Group, involving PricewaterhouseCoopers (PwC), have led to the unprecedented termination of important business relationships going back three decades. KPMG South Africa’ involvement in a political corruption scandal is also proving to have even more far-reaching implications, which risks impacting KPMG’s international operations. In this blog post, I will delve into these controversies and highlight the mechanisms that can help to preserve auditor independence and maintain a strong reputation.
<UPDATE> P&G vs Trian Partners - the Largest Proxy Fight in History
Preliminary results show that Nelson Peltz lost his proxy contest against P&G. At the conclusion of the AGM, the company announced the election to the board of all 11 of its nominees. Peltz is not yet admitting defeat, stating that the vote results are” too close to call” (within a 1% margin), and has called for P&G to appoint him on the board regardless the vote count. Following the news, P&G’s stock price dropped by 2.7% to USD 89.86, closing, however, at USD 91.62.
Sizing up the US withdrawal from the Paris Agreement
President Trump’s announcement last week that he will pull the US out of the Paris Agreement is unlikely to have any meaningful impact on clean energy transition. This is because the global pivot to renewable energy is increasingly being driven by economic fundamentals, not policy (an argument we made in our deep dive of the Paris Agreement in January 2016).
Dieselgate: Opening a New Era for the Auto Industry?
On 23 May 2017, German prosecutors raided Daimler AG’s offices in Stuttgart as part of their investigation into alleged emissions fraud. The company’s shares have since tumbled 4.3 percent. Daimler’s experience is the latest reminder that investing in clean technologies is money better spent than paying penalties for non-compliance in an increasingly stringent regulatory environment.
Can Country ESG Research Help You Identify Risks in Your Sovereign Bond Portfolio?
In recent years, we have seen a significant increase in the number of investors that integrate environmental, social and governance (ESG) considerations into their fixed income strategies. This is especially true when it comes to corporate bonds. The use of our Country Risk Research & Ratings in sovereign bond investments is however still comparatively new and clients often ask me how our research can support them.
Why Responsible Investing is in our DNA
– Celebrating Sustainalytics’ 25th anniversary. This year Sustainalytics turns 25. It is an important event to celebrate, but, for me, the true value of such milestones lie in the fact that they give you pause to reflect. While Sustainalytics is a success story, it doesn’t mean we didn’t have some peaks and valleys. At any rate, I ask myself how we were able to create a company that has built responsible investing into its very DNA.