Saturday Morning Links

Assorted content for your weekend reading.

- Lana Payne discusses how inequality and insecurity inevitably serve as the key explanation for the rise of right-wing populism. And Adam Johnson rightly challenges the theory being presented by some that the answer to expressions of frustration by people left out of policy decision-making is to restrict democracy even further, while Adela Jones points out that the Trans-Pacific Partnership looms as yet another means of allowing corporations to dictate public choices.

- Meanwhile, Luke Kawa comments on new research showing that the general practice of corporations is to mislead the public in order to ensure insider gains:

(R)esearchers developed two hypotheses: either managers make disclosures in a timely matter (and their forward-looking information is quickly reflected in stock prices) or members of the C-Suite actively "lean against the wind" to understate good or bad news — or even offer the completely wrong impression of what's transpired since the last quarter ended.

Their findings suggest that guidance (or "bundled forecasts") provided by managers as well as the general tone of the conference call (analyzed using a "bag of words" approach) "point toward rejection of Timely Disclosure in favor of the Leaning Against the Wind alternative."

"Managers’ forecasts and tones in conference calls are, according to objective measures, more pessimistic when managers have positive post-quarter information, suggesting that at announcement they actively manage down investor expectations and stock price," they write.
...
A cynic, however, might suggest that by suppressing the stock price by failing to disclose accurate information about the current quarter, managers are giving themselves the opportunity to acquire shares  at a discount to what they would've otherwise paid, once the blackout period is over.

The evidence is with the cynics.

The team found that the relationship between underwhelming-to-negative commentary and forecasts from management (in spite of a real-time corporate sales indicator suggesting robust activity) and a positive return in the period starting a few days after earnings were reported is stronger and more reliable when insiders are purchasing shares during this period. "This implies that insiders understate their private information to purchase undervalued stocks prior to the price increase," they write.

"Unfortunately, we do not see any coherent alternative hypothesis — other than managerial manipulation for personal gain — to explain our particular rejection of the Timely Disclosure Hypothesis," the team concludes.

- Olivia Ward reports on UNICEF's latest study showing that tens of millions of child deaths around the globe are expected to result from inequality between now and 2030.

- Ryan McGreal observes that Canada Post's excuse for planning to lock out workers is based entirely on a crisis which it manufactured for itself. And David Climenhaga notes that the media seems far less inclined to warn about the consequences of shutting down a vital public service when it's management choosing to make that happen.

- Finally, Dean Beeby reports on a CRA investigation which revealed tens of millions of dollars worth of rebate and incentive income hidden by drugstores - yet resulted in no charges.