Wall Street Journal Articles of the Week

You should read these articles from the Journal; they will be discussed in section the week after they appear. The contents of these articles relate closely to the material in the course. Please get the articles either from your copies of the Journal or from your access to the online Journal. We will not in general post hotlinks to full text. The list of article citations will be posted the weekend after Friday’s class, for discussion during the following week’s sections.

Articles from the week of September 8 (we will actually start this “week” on September 10 to make sure that everybody is getting the Journal. – During this first week we hope that many of you will see this list, but we understand that full implementation will occur next weekend (Sept. 21), when everyone knows where the list is posted and can access their copies of the Journal):

John R. Emshwiller, "Leading the News: Ex-Treasurer Is First Enron Officer to Go to Prison; Ben Glisan's Guilty Plea Without Cooperation Deal Closes an Avenue in

Inquiry," Wall Street Journal (September 11, 2003): A.3.

Anna Wilde Mathews and Scott Hensley, "FDA Targets An Upsurge In Fake Drugs," Wall Street Journal (September 11, 2003): B.1.

Joann S. Lublin, "Where Was the NYSE Board?; Certain Governance Practices Embraced by Many Companies Were Avoided by the Exchange," Wall Street Journal (September 11, 2003): C.1.

Carrick Mollenkamp, "Mutual Funds Under Fire: Bank of America Begins Firing Executives Tied to Spitzer Probe," Wall Street Journal (September 11, 2003): C.12

Randall Smith and Theo Francis, "AIG is Charged by SEC with Fraud," Wall Street Journal (September 12, 2003): A3.

Articles from the week of September 15 (for sections during the week of September 22):

Jonathan Weil and Cassell Bryan-Low, “Audit Firms Overbilled Clients for Travel, Arkansas Suit Alleges,” Wall Street Journal (September 17, 2003): A.1.
PricewaterhouseCoopers’s billing practices have been investigated by the Justice Department after a lawsuit in which Price, KPMG and Ernst & Young have been accused of fraudulently overbilling clients for travel-related expenses. All the defendants deny the allegations. Although reimbursable out-of-pocket expenses are not illegal, they should be disclosed to the clients. This article addresses the issues of ethical behavior and transparency in the firm-client relationship.

Ronald Alsop, “Right and Wrong,” Wall Street Journal (September 17, 2003): R.9.
The article explores the issue of how business schools and companies have become more sensitive to applicants’ and job candidates’ ethical standards and behavior. Approaches to ethical education are explored as well as the possibility of students taking an ethics oath at graduation.

Kathryn Kranhold, “Sign of Times: GE Chief Immelt to Get Stock – Not Options,” Wall Street Journal (September 18, 2003): B.1.
GE will tie the majority of its CEO’s pay not to stock options or restricted stock, but to a stock award that requires him to meet specific performance targets. This article is relevant because it brings into light what GE – among other companies – is doing to reshape its executive compensation and corporate governance policies.

Deborah Solomon and Kate Kelly, “Wide SEC Review May Revamp Structure of U.S. Stock Markets, " Wall Street Journal (September 19, 2003): A.1.
William Donaldson, the chairman of the SEC, plans to reshape the structure of the stock markets. His concerns are the regulation of the fragmented stock market and the issue of investors being able to get the best price when stocks are bought and sold.
This story cites and is related to the ongoing governance issues at the New York Stock Exchange. Although we won’t cite a particular article this week, there have been a string of them on Dick Grasso’s compensation and resignation. We suggest that you review at least some of these articles in order to better inform your class discussion of the issues.

Articles from the week of September 22 (for sections during the week of September 29):

S. Carey, “FTC Asked to Examine JetBlue Matter,” Wall Street Journal (Tuesday, September 23, 2003): A12.
Discusses a privacy-rights organization’s complaint to the FTC about JetBlue’s provision of passenger data to the Pentagon.

Michael Useem, “Behind Closed Door,” Wall Street Journal (Tuesday, September 23, 2003): B2.
Elaborates on the lack of attention of some boards of directors with respect to the implications of some of the executive decisions they approve. “Are directors consciously concerned or indifferent when they decide on a company’s course?” Also discusses how Enron’s board suspended its ethics code as the request of CFO Andrew Fastow.

S. Craig, I. J. Dugan, K. Kelly, and L. P. Cohen, “Taking Stock: As End Neared, Grasso Held on in Hopes Pay Furor Would Ebb,” Wall Street Journal (Friday, September 26, 2003): A1.
Discusses the ouster of NYSE CEO Dick Grasso and the huge compensation package that led to it.

C. Bryan-Low and J. Weil, “Former Partner at Ernst Is Arrested,” Wall Street Journal (Friday, September 26, 2003): A3.
Describes the obstruction of justice charges brought against an audit partner at Ernst and Young for document destruction under the Sarbanes-Oxley Act, and the possibility of charges being laid against the company itself. Compares this case to that of Arthur Andersen.

The following article should be held for reading for the course material that should be presented in lecture on November 14 (on public vs. private organizations):

June Kronholz, “Capital Opportunity for School Vouchers,” Wall Street Journal (Thursday, September 25, 2003): A4.
Discusses an impending U.S. Senate vote on a voucher program that would send 2000 District of Columbia students to private school at public expense, and some of the pros and cons of voucher programs.

Articles from the week of September 29 (for sections during the week of October 6):

"Scandal Scorecard," Wall Street Journal (Friday, October 3, 2003): B1.

A status report on the companies and principal players involved in recent corporate scandals.

Joann S. Lublin, "Executive Pay Keeps Rising, Despite Outcry," Wall Street Journal (Friday, October 3, 2003): B1.
Discusses trends in executive pay in 2002 and 2003, and reasons why compensation keeps increasing. CEOs continue to find new forms of compensation despite negative publicity.

John Hechinger and Christopher Oster, "Fund Probe Reaches Prudential," Wall Street Journal (Thursday, October 2, 2003): C1.
Six mutual fund companies are now involved in an investigation on improper "market timing" by New York Attorney General Eliot Spitzer. Several brokers and managers have resigned under pressure.

The following article will be discussed in section along with chapter 3 of Nickel and Dimed. Because of the quiz review this week, we will discuss these materials next week in section. You do not need to read this article for the quiz, but you do need to have read, as announced in class, all the readings listed in the syllabus through October 3, plus the Wall Street Journal articles above. This includes reading through p. 221 in Nickel and Dimed.

Bernard Wysocki Jr. and Ann Zimmerman, "Wal-Mart Cost-Cutting Finds Big Target in Health Benefits," Wall Street Journal (Tuesday, September 30, 2003): A1.
Wal-Mart keeps costs low with restrictions and tough stances in its health benefit policy for employees.

Articles from the week of October 6 (for sections during the week of October 13):

Dennis Berman, “Online Laundry: Government Posts Enron’s E-mail,” Wall Street Journal (Monday, October 6, 2003): A1.
The Federal Energy Regulatory Commission posted more than one million pieces of Enron’s e-mail and other documents covering the years 2000 through 2002 on the Web. This article addresses the issue of privacy in the workplace.

Kate Kelly, Susanne Craig, and Jeanne Dugan, “The NYSE’s Other Millionaires,” Wall Street Journal (Thursday, October 9, 2003): C1.
The NYSE will disclose the pay packages of two co-chief operating officers. The interim chairman of the NYSE, John Reed, “has begun an era of heightened financial disclosure and lower executive pay.”

William M. Bulkeley, “IBM Faces Trial on Employee Cancer Cases,” Wall Street Journal (Friday, October 10, 2003): B1.
Two former workers of IBM argue that they contracted cancer from exposure to chemicals at the company. The case will be brought to Court next week. If won by the employees, it may be the first of a series in the electronics industry.

Please save the following article to support our discussion of regulation, now scheduled for the lecture on December 5 and the sections beginning on December 1 (yes, before not after the lecture -- after the lecture is finals week):

Michael Schroeder and Terence Roth, "Heavy Regulation Seen as Obstacle," Wall Street Journal (Tuesday, October 7, 2003): A2.:

Note that in this study the United States is one of the lower regulation countries. The regulations studied here tend to deal with creating businesses, doing business, and dealing with bankruptcy, and not with environmental or worker protections.

Articles from the week of October 13 (for sections during the week of October 20):

Carrick Mollenkamp, "Key HealthSouth Documents Might Have Gone to Shredder," Wall Street Journal (Tuesday, October 14, 2003): A3.
Documents how documents relevant to an SEC probe of HealthSouth may have been shredded. One paragraph highlights the effects of new Medicare regulation on HealthSouth stock (which may have prompted the chairman to sell).

Cynthia Crossen, "A Thirties Revelation: Rich People Who Steal Are Criminals, Too," Wall Street Journal (Wednesday, October 15, 2003): B1
A very nice article about how white-collar crime came to be regarded as crime. Deals in part with the conduct of robber barons, and mentions regulatory attempts (Sherman Antitrust Act, FTC, SEC) to curtail questionable activities undertaken in the name of profit.

Dean Starkman, "Shakeup: Rechler Out, Rechler Out, Rechler...," Wall Street Journal (Wednesday, October 15, 2003): C1.
Discusses restructuring of a realty firm in order, in part, to alleviate domination of the board by members of one family.

Anonymous, "Gates Charity Offers 'Challenge Grants,'" Wall Street Journal (Friday, October 17, 2003):B2.
A brief article about the Bill and Melinda Gates Foundation's attempts to get medical researchers to address particular health issues.

The "executives on trial" sections from October 15 (p. C16) and October 17 (p. C9) have more on Tyco and Rite Aid. On the same page (C9) in the October 17 paper, there's a report on possible reforms of the NYSE board. [Reading of these three items is optional.]

Articles from the week of October 20 (for sections during the week of October 27):

Carrick Mollenkamp, "Vital Signs: After a Devastating Prognosis, HealthSouth Seeks a Recovery", Wall Street Journal (Tuesday, October 21, 2003): A.1.

This article gives a detailed description of the strategies adopted by HealthSouth's board of directors to deal with the crisis.

Review and Outlook [Editorial], "Revenge of the Investor Class", Wall Street Journal (Thursday, October 23, 2003): A.20.
The article discusses recent scandals involving the mutual funds industry and consequences for the funds' costumers.

Ann Zimmerman, "Raid Rounds Up 300 Illegals at Wal-Mart", Wall Street Journal (Friday, October 24, 2003): B.1.
More than 300 illegal workers were rounded up at Wal-Mart on Thursday. The article briefly discusses the presence of millions of illegal workers in the American workforce.

In addition to the Wal-Mart article cited above, a broader discussion of the same issue can be found at:

Review & Outlook [Editorial], "The Wal-Mart 300", Wall Street Journal (Friday, October 24, 2003): A.14. Are there issues or points of view that the Journal's editorial does not consider?

Articles from the week of October 27 (for sections during the week of November 3):

Monday's paper (October 27) had a special section on Corporate Governance. We recommend that you read all of it, and that you go to the web site locations mentioned to read material there as well. The following three articles from the section are required reading:

Carol Hymowitz, "How to Be a Good Director," Wall Street Journal (Monday, October 27, 2003): R.1.
Being a corporate director now is much more challenging than before the recent scandals occurred. What should directors pay attention to? Which tasks are crucial? The article outlines a few traits that qualify a good director.

Judith Burns, "Everything You Wanted to Know About Corporate Governance... But Didn't Know to Ask," Wall Street Journal (Monday, October 27, 2003): R.6.

This article provides a nice summary of the functioning of corporate governance and of current issues relating to it.

Daniel Nasaw, "Opening the Board: The Fight Is On to Determine Who Will Guide the Selection of Directors in the Future," Wall Street Journal (Monday, October 27, 2003): R.8.

The article reviews the issues surrounding the selection of directors and notes proposed reforms.

Also read the following two articles:

Marc Lifsher, "Chevron Would Face $5 Billion Tab for Amazon Cleanup," Wall Street Journal (Thursday, October 30, 2003): A.15.
ChevronTexaco Corp. faces charges that it severely polluted the Ecuadorean Amazon region from 1971 to 1992. Plaintiffs request that the company pay for a thorough cleanup.

John R. Emshwiller, "Former Executive of Enron Pleads Guilty to Charge," Wall Street Journal (Friday, October 31, 2003): A.3.
The former head of Enron's North American unit and retail electricity unit settled criminal and civil charges related to fraud. He faces as many as 10 years in prison.

Articles from the week of November 3 (for sections during the week of November 10):

C. Mollenkamp and C. Terhune, “Scrushy Indicted on Fraud Charges,” Wall Street Journal (Wednesday, November 5, 2003): A3.
Describes the charges that have been filed against the former chief of HealthSouth, who is the first CEO from a major company to be charged with violation of Sarbanes-Oxley.

I. McDonald, “Investors Flee Some Funds Amid Scandals,” Wall Street Journal (Tuesday, November 4, 2003): D1.
Documents the growing scandal associated with late-trading and market timing in the mutual fund industry.

D. Solomon, “SEC Rules Limit Who Qualifies as ‘Independent’,” Wall Street Journal (Wednesday, November 5, 2003): A2.
Discusses SEC approval of new rules to improve the independence of corporate boards at companies that list on the NYSE.

Articles from the week of November 10 (for sections during the week of November 17):

Ken Brown, "Vanguard Gives Corporate Chiefs a Report Card," Wall Street Journal (Monday, November 10, 2003): C1.

This article describes changes in how the nation's second-largest mutual fund firm is behaving as an institutional investor, often going against management positions in proxy votes and demanding that corporations reform their positions on key corporate governance actions.

Neal Boudette, “VW’s Mixed Grill: An Assembly Line Turns Out Sausages,” Wall Street Journal (Tuesday, November 11, 2003): A.1.
This article describes how Wolfsburg’s VW plant keeps a production line of “currywursts”. This tradition comes from the 30s, when the plant had to provide housing and food for the employees. It is an illustration of paternalistic behavior, and of the mechanisms through which such behavior is incorporated in the organization’s culture.

Dow Jones Newswires, “Tobacco Firms, Spitzer Reach Pact on Ads,” Wall Street Journal (Tuesday, November 11, 2003): D.3.
This short article reports on advertising changes in the tobacco industry in connection with the national tobacco settlement agreement. The article can be associated with corporate social responsibility and reputation.

Scott Hensley, “Pfizer Makes Aid Pledge, Breaks Aid Pact,” Wall Street Journal (Wednesday, November 12, 2003): B.1.
Pfizer retreated from a deal for getting an inexpensive AIDS drug to poor countries. At the same time, Pfizer donated $500 million towards the eradication of blindness caused by trachoma in the developing world. The article addresses the complexity of corporate philanthropy actions in some industries, in specific situations.

Articles from the week of November 17 (for sections during the week of Decermber 1):

Cassell Bryan-Low, "KPMG Didn't Register Strategy," Wall Street Journal
(Monday, November 17, 2003): C1.
A former partner of KPMG recommended not registering a new tax-sheltering
strategy with the IRS, noting that the company would reap huge fees from
sales of the tax shelter, while the penalty would be small if the sales
are discovered by IRS.

Anna Wilde Mathews and Brian Steinberg, "FTC Examines Health Claims in
KFC's Ads," Wall Street Journal (Wednesday, November 19, 2003): B1.
KFC's new TV commercial claims that its chicken breasts can fit into a
low-carbohydrate diet, and make consumers more healthy. The FTC is asking
the firm to justify its claims.

Sue Shellenbarger, "Unpaid Overtime: Coping With Pressure to Volunteer For
the Company's Causes," Wall Street Journal (Thursday, November 20, 2003):
D1.
Corporate-sponsored volunteer programs bring companies good PR, but often
leave employees with more workload and less time with their families. The
author suggests a few ways to balance the company's demand and the
employee's own needs.