Fears of a global slowdown seemed to shift this week from panic to problem-solving mode. The Organisation for Economic Co-operation and Development (OECD) released a report calling for widespread and coordinated policy reform to spur economic growth, while negative interest rates drew increasing curiosity. At the same time, researchers detailed why one growth tactic—bribery and corruption—doesn’t pay off for corporations in the long run. Consider it a feel-good confirmation.
4 need-to-know headlines
1. OECD releases growth plea as G-20 convenes
As G-20 finance officials met in Shanghai, the OECD sounded the alarm over the slowdown in global economic growth. For 2015, the G-20 countries as a whole saw exports fall by 11.3% and imports drop 13%, according to the Paris-based think tank. And don’t think just one or two countries drove the trend. Of the 20 countries, not one escaped a decline in imports and exports. In its report, the OECD called on governments to step up reforms to boost economic growth: “Getting back to healthy and inclusive growth calls for urgent policy response, drawing on monetary, fiscal, and structural policies working together.” (via Reuters.com)
2. Corruption doesn’t pay, research confirms
Just in case you need another reason to keep up anticorruption efforts, consider this: New research in the American Accounting Association’s journal studied the confidential anticorruption ratings of 480 multinational companies. Researchers found that in countries with high rates of bribery and financial crime, those multinationals with strong anticorruption programs had average sales growth of 2.6% over three years, compared with a whopping 14.1% for companies that let anticorruption efforts take a back seat. Yet that short-term bump was offset by negative media exposure that damaged both companies and individuals. “On average the sales growth and [return on equity] effects are offsetting,” the authors concluded. (via CFO.com)
3. EU competition chief denies U.S. bias
When U.S. Treasury Secretary Jack Lew sent a letter last month attacking EU policymaking, he inadvertently found a pen pal. He called into question tax probes aimed at multinationals, accusing them of being deeply biased against U.S. companies. In her response this week, European Commissioner for Competition Margrethe Vestager says the tax probes are “based on firm legal ground.” The probes target so-called sweetheart deals that some countries strike with companies, allowing them to skirt some tax burden. If the investigation finds the deals are illegal, companies may be pressed into paying back funds related to the tax breaks. (via FT.com, may require log-in)
4. More consider the upside of negative interest rates
As central banks around the world battle anemic inflation, more countries are sizing up the unorthodox tool of negative interest rates. This week, European Central Bank executive board member Benoit Coeure jumped on the bandwagon, releasing a statement that the bank is “studying carefully the schemes used in other jurisdictions.” The Bank of Japan and several smaller European authorities have already embraced negative interest rates. (via Bloomberg.com and Economist.com)
The stat: 1,978.35
That’s what the U.S. S&P 500 Index hit earlier this week—an eight-week high for the closely watched indicator. Analysts credited the rise to a bevy of upbeat indicators: U.S. factory activity rose more than expected last month, ending its near-continuous slide since late 2014, and U.S. construction spending reached a new peak since late 2007. A sense of cautious optimism seems to be replacing widespread fears that a global slowdown is inevitable. (via Nytimes.com)
Sound bite of the week
“If the old way of hiding information or making it less prominent was to put it in the footnotes, the new way is to leave it in the text.”
—Ron Schneider, director of governance services for R.R. Donnelley & Sons Co.
Financial disclosures have ballooned in recent years, in response to increased regulations requiring companies to divulge more information to investors. But some argue that lengthy filings also make it easier for organizations to bury relevant info. (via WSJ.com, requires log-in)
4 Top Stories + 1 Key Statistic + 1 Industry Quote = The CFO 411
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