Responsibility Permeates Companies

Corporate governance; unless you’ve studied management in some form or you’re an avid reader of the financial press, it’s a term that means little to you. It’s really just a fancy term that represents the manner in which a company’s directors and officers manage their business. For you and me, investors, however, the term can mean much, much more.

The subject of corporate governance, or responsibility, became front-and-center earlier this decade with the introduction of Sarbanes-Oxley; an act ratified to ensure that upper management was signing-off on what it believed to be accurate and realistic financial statements each quarter and at year-end. Beyond the issues of accounting, however, more and more people began to question the ethics of management teams and the actual relationship between their interests and those of minority shareholders. Ever since, the public has been scrutinizing management and the releases to the public like never before and some interesting correlations have appeared. It would seem that management that is responsible in one way, is often responsible in others as well.

Companies whose management has demonstrated sound corporate governance correlate highly with those who have ranked highly for their social responsibility and, more importantly, vice versa. Invested Interests ( www.InvestedInterests.com ) gained attention with the introduction of its powerful mutual fund screener tool as an effective tool for investors looking for more than tree-hugging companies; given the aforementioned correlation, socially responsible companies are the same firms that show low volatility and consistent performance. In a time when intraday volatility can wipeout a lifetime of diligent savings and investment, stability is at a premium and firms like Invested Interests are helping investors identify the hidden gems.

When you consider that CEOs are no different than you and me, it’s no surprise that their behavior and ethics with respect to the environment, for example, is likely to share similarities with the responsibility they feel for they way in which their institutions are managed. Smart investors are always looking for an edge over the masses and it would seem that there is a new and novel way to find the companies, and management teams, that will see you and I through these crazy times.

Mutual Fund Social Screen Tool