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How Investors Should Manage Executive Liabilities of Their Stocks (Part 2)

15 November 2007 - Features - Editor

How Investors Should Manage Executive Liabilities of Their Stocks (Part 1)

Management audit reveals the quality and depth of factual information that routinely escapes nerd accountants. Ask any executives you know, and you will get confirmation that statutory audits by external accountants only scratch the surface, as compared to internal evaluations done for the benefits of major holders of stocks-both actual and prospected.

The truth is that small investors need to get organized. Their rights are abused because they allow it to continue. Small investors remain sadly unaware of their rights and of their collective powers as well. Returns from small investments in stocks can improve dramatically, and they can be safeguarded through the weapons of truly independent and probing management audits.

Lessons for Private Stocks from Governance

Closely held stocks hold lessons for small investors. Powerful investors wield great powers to keep executives within manageable limits. This does not stifle individual creativity, but does not shy away from asking the right questions, and demanding actions instead of evasive answers. Wealthy investors do not make selections of stocks unless they have decisive entries in to the operations and strategy formulations of the enterprises involved. Small investors should act in the same manner, whether singly or acting in concert with like-minded people. Pension funds are top examples of the combined power of small individuals.

Selling prices, authority levels to spend money, approval of supplies for major supplies and equipment, and credit terms extended to customers, are just a few examples of the crucial matters which management audits address with powerful lenses: statutory auditors are not bothered with such levels of detail, and hence fail to spot cases of dangerous executive decisions in time. So stop getting pushed around, and put your money on stocks where your management auditor and you can have access to meaningful operating and strategic matters!

 


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