LABJ Forum: Half-Empty vs. Half-Full
The Dow Jones Industrial Average plummets 200 points one morning, only to climb 100 in the afternoon. Earnings are falling shy of projections, chief executives face indictment and even good news is met with a shrug. Given all the volatility, the Business Journal asks: What do you think needs to happen to restore confidence in Wall Street?
J. Michael McKay
President and Chief Executive
It is going to take a minimum of two quarters of steady performance from the Blue Chip companies to get the average investor investing again. In terms of restoring the public's confidence, I think it will be the large companies like McDonalds and Home Depot, not the small fly-by-night companies that run up the Nasdaq, that need to increase earnings to get everyone enthusiastic about investing.
Schulze Haynes & Co.
Companies operate with integrity and right now we are seeing the exception to the rule. Accounting firms need to rid themselves of even the appearance of a conflict of interest to restore the public's confidence. Although I think the balance of public companies do operate with integrity in terms of their financial reporting, there needs to be tighter regulation of CPAs and the whole financial reporting process.
Gardner & Booth
It is going to take a restoration of confidence in large company accounting. The lack of confidence comes from people distrusting what companies are telling them about their earnings. However, I don't think the current mistrust will last more than a few months. As the economy improves, people will go back to having more confidence in companies' earning abilities, which I think will balance out some of the mistrust.
Gateways Hospital & Mental Health Center
We need more accountability. More laws need to be developed and enforced to create some way to prosecute those who benefit from other people's misfortunes, whether the employees of the company or its shareholders. There should be significant penalties for noncompliance and misappropriation according to generally accepted accounting principals. The key people are taking the public for a ride because they have the inside story and we need to find a way to recoup the money and return it to the investors.
Venbrook Risk Management and Insurance Services
There need to be tougher laws on corporate governance, and top executives need to be held at a high standard. Also, we need to prosecute any and all people found doing things illegally. I believe some time needs to pass before investors get back into the market. After all the media hype dies down, confidence will naturally be restored. Right now, we all feel suspect about what is happening behind closed doors. It is in the best interest of many large companies to invest public relations dollars in speeding up the restoration process.
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