Companies Try to Improve Credibility
By ALAN CLENDENNING
AP Business Writer
Friday March 1, 2:06 pm Eastern Time
Wary of Enron, Companies Unconnected to Energy Trader Try to Improve Credibility
NEW YORK (AP) -- Worried about being tainted by accounting scandals and corporate conflicts, corporations across the county with no direct links to Enron are trying to boost their credibility.
Since many want to get a positive message out quickly to shareholders, industry analysts and the media, it's created a boon for public relations firms that specialize in making companies look good -- or at least keep them from looking bad.
"Now there's a totally different look at things," said Bob Dilenschneider, chairman of the New York-based Dilenschneider Group public relations firm. "It goes to the whole issue of corporate governance and how governance is looked at, accounting and how accounting is looked at. All these have huge public elements to them."
Public relations agencies are being called in to help companies plot strategy -- how to convince shareholders and the public that they don't have any of the problems that the Enron debacle exposed. Changes being made by companies range from ensuring that their board members are truly independent to determining whether they are disclosing enough information about their finances.
" (It's) how do we become as clean as the driven snow?" Dilenschneider said.
Late last month, Apple Computer announced a new policy banning its auditors from performing consulting services -- eliminating a potential conflict similar to that at Enron, which used Arthur Andersen for both auditing and consulting work.
General Electric Co. on Feb. 20 warned that its upcoming annual report could end up as thick as a Manhattan phone directory with more information about its accounting practices and businesses. GE will provide revenue and operating profit figures for 26 businesses from its industrial and financial services units. Previously, the company reported on 12 business segments.
The most intense scrutiny of a company suspected of having problems similar to Enron has fallen on Tyco International Ltd. (NYSE:TYC - news), a Bermuda-based conglomerate. Tyco has been barraged by criticism of its disclosures and accounting practices, prompting a 50 percent drop in its shares since December.
To counter the bad press, Tyco officials took the extreme step of holding a weekly conference call with analysts, shareholders and reporters to get the company's point of view out.
The strategy caught on elsewhere. Denver-based Qwest Communications International Inc. also started using a weekly conference call, with its executives pitching their positive view of the financially troubled telecom company's future.
Other companies that were changing their corporate structure before Enron's troubles began have found themselves in the odd position of having to explain changes that wouldn't have raised questions previously.
For example, the Interpublic Group of Companies, one of the world's largest advertising and marketing firms, announced Feb. 11 that four of its executives would step down from the company's board in a move to make the board more independent.
Although IGC's changes had been planned for more than a year, reporters wanted to know if the move was a response to problems at Enron. IGC officials had to explain the timing was a coincidence.
"You can understand why this is happening," said IGC spokesman Philippe Krakowsky.
The impact of Enron has also turned public relations firms and departments into talent agencies for experts that few reporters wanted to interview before the company imploded.
Accounting experts who drew yawns from most journalists only six months ago are now making repeat appearances on business television programs and in the pages of the nation's largest newspapers.
Before Enron's accounting issues were disclosed, Steve Infanti had difficulty persuading reporters to talk to accounting professors from Penn State's Smeal College of Business.
"It was a field that had an image of bow ties and calculators," he said. "As the fallout continues and the dust settles, people see accounting as an important part of Wall Street and investing." |
