The Fruits of Civilization (44-7) Corporate Management Quality

Corporate Management Quality

It may seem problematic to make a broad characterization about the quality of corporate management on a global basis, but it is hard to think of a better measure than what those who lend money to corporations think of the risk they are taking in doing so.

The credit quality of the corporate debt market globally has dropped steadily since 1980, from A to BBB–. The median bond quality is now just one notch above “junk”: pure speculation.

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It does not help that accountants are commonly incompetent. A 2016 global survey found 42% of corporate audits deplorably flawed. The largest accounting firms are periodically found to egregiously violate regulations. (Governments don’t regulate businesses diligently, and typically find violations when they bother to audit.)