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Good morning.
It is Friday, so some feedback. KF wrote in to call my attention to an op-ed in the Wall Street Journal that suggested signatories of the Business Roundtable corporate purpose statement were more engaged in “virtue signaling” than actual virtue. I had missed it, but you can read the piece here.
It was written by two academics, who matched each company that signed the BRT statement with a control company, and then used several metrics to measure their “stakeholder” performance. Some of the metrics strike me as questionable. For instance, they used both shareholder buybacks and market concentration as signals of anti-social corporate behavior. Bottom line: the BRT firms didn’t score as well as the control group.
That is the opposite of the findings of two other groups whose work I respect—Just Capital and the Drucker Institute. Both found Business Roundtable companies did better than other companies on the metrics that matter most to stakeholders.
But the debate underscores a fundamental problem as companies move away from a pure shareholder return model. Metrics matter. It will be hard to hold companies accountable for their obligations to society until we can agree on how to measure those obligations.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Aramco Valuation
Saudi Aramco has priced its shares at the top of the targeted range: $8.53. That should make its upcoming IPO the biggest ever, but not by much—Alibaba raised $25 billion in 2014, and Aramco intends to raise $25.6 billion. That represents a 1.5% stake in the oil giant, at a total valuation of $1.7 trillion. Wall Street Journal
Uber Assaults
Uber has published its long-awaited safety study, revealing that there were 3,000 sexual assaults reported on its U.S. rides alone last year, including 235 rapes. There were also 107 car-related fatalities in 2017 and 2018, and 19 fatal physical assaults. Chief legal officer Tony West: "Confronting sexual violence requires honesty, and it’s only by shining a light on these issues that we can begin to provide clarity on something that touches every corner of society." Fortune
Pork and Beans
China, which has been suffering a major pork shortage due to an outbreak of African swine fever, is to waive tariffs on some U.S. soybean and pork shipments. The move comes as China and the U.S. attempt to at least partially resolve their trade war. CNBC
China Loan
Speaking of Sino-American rivalry, the U.S. has objected to a $1-billion-a-year loan to China from the World Bank. The U.S. line is that China is no longer a developing economy, so does not deserve low-interest loans from the World Bank, whose greatest contributor is the U.S. Let's see how this turns out, bearing in mind that former Trump administration Treasury official David Malpass took over as World Bank president this year. Financial Times
AROUND THE WATER COOLER
Evil Hackers
The U.S. has indicted two members of a Russia-based hacking group called Evil Group, over a mega-hack that saw $100 million stolen from companies around the world. The men are Maksim Yakubets and Igor Turashev, who are charged with bank fraud, conspiracy, computer hacking and wire fraud. Only issue is that their whereabouts are not known—there's a $5 million reward on offer for information leading to their arrest and conviction, which is a record for cybercrime. Al Jazeera
Amazon Cases
Amazon faces a series of lawsuits over combustible hoverboards that were bought over the platform. The cases are challenging the idea that Amazon is not liable for the safety of the products traded in its marketplace—though so far, Amazon has argued its side successfully in court. WSJ
German Manufacturing
German's industrial output fell unexpectedly in October due to weak demand. Experts expected a 0.3% month-on-month rise, but instead got a 0.4% drop. Orders from other Eurozone countries were up, but those from within Germany and outside the Eurozone were down. Bloomberg
Sydney Fires
Australia's biggest city, Sydney, is covered in smoke due to a series of bushfires that have just combined into a mega-blaze to the city's north. This year's fires started in early November, which is months earlier than usual, and have so far claimed at least four lives. Satellite images have shown the smoke spreading as far as New Zealand. Reuters
This edition of CEO Daily was edited by David Meyer.
