Investors are studying a spate of recent, high-profile European corporate scandals - from Ahold and Adecco to Parmalat and Cirio - searching for common themes that can help them avoid future investment meltdowns.
Identifying trends in the corporate structure of such firms allows them to be factored in to the risk models investors use to decide where or where not to put their money.
"Investors are taking this very seriously," said Chavan Bhogaita, credit research analyst at Commerzbank.
Europe has been shaken over the past year by a series of corporate scandals that have cost investors dearly.
Dutch retailer Ahold hit the headlines last year and Swiss staffing firm Adecco in January, both with reports of mismanagement at their US operations.
Senior figures at bankrupt Italian food groups Cirio and Parmalat, meanwhile, have been investigated for fraud.
Added to the collapse of such firms as energy giant Enron in the United States, the events have led investors on both sides of the Atlantic to focus on weeding out bad businesses.
Globally, fund firms have been increasing their corporate governance teams and private research firms are vying fiercely for business as investor watchdogs.
In Europe, some researchers have recently issued a cross-border code with which to judge good corporate structure. The European Commission is also preparing to address the issue.
"In the 1990s there was more focus on financial models compared to non-tangibles," said Gavin Anderson, chief executive of GovernanceMetrics International, a US-based corporate governance ratings agency. "I think now the pendulum is swinging back and governance is regaining importance."
Analysts say a number of things can signal danger.
Transparency and disclosure in accounting and business practices, for example, are considered critical in influencing risk because they shine light on possibly troubled areas.
"Fraud is the ugly sister of poor disclosure," said Simon Surtees, a member of Gartmore Investment Management's credit team.
Other key factors involve management, including the concentration of family ownership and the proportion of a company's directors that are independent.
"One thing Adecco and Parmalat have in common is a shortage of independent directors," GovernanceMetric's Anderson said.
He noted that the Tanzi family had 51 percent of Parmalat's voting rights and said his firm considered only two of nine directors at Adecco to be truly independent.
A high concentration of family ownership can limit shareholders' influence on a company, with consequences for areas such as minority shareholder rights and disclosure.
Parmalat's troubles appear to be at least partly based on a lack of transparency. A warren of off-shore subsidiaries and special purpose vehicles has come to light since the company filed for insolvency on December 24.
"Investors will view Parmalat-style capital structures with more scepticism," said one leveraged buyout adviser, adding that companies are already making changes to reassure investors.
"There is definitely a move by companies to clean up their capital structures and consolidate their financing," he said.
Shareholder activists are also becoming increasingly vocal about issues such as executive pay and the separation of the roles of chairman and chief executive.
The Washington-based Investor Responsibility Research Centre, which monitors shareholder activism, said in a recent report that 2004 could be a record year in terms of the number of shareholder resolutions destined to appear on US proxy voting forms.
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