More specifically, she reports the story of how Joel Ronning, the foolish CEO of Digital River, apparently threatened litigation against a boutique research firm & a stock analyst (you can read the details here).
Morgenson kicks some serious CEO ass:
But executives who disagree with those assessments or even dislike the analysts charged with covering them should sit down and shut up. Bullying analysts is unacceptable behavior that the S.E.C. has said it wants stamped out. It is not just childish, but downright dumb.
Such behavior also shows a deep disrespect by company management for individual thinking and an even deeper insecurity about themselves and their business. Indeed, retaliation by a company against a straight-talking analyst should be viewed as a red-flag warning that the company or its executives may have something to hide.
Concealing problems can work for a while in life. But it rarely works forever.
My attitude is even simpler: With over 9,000 stocks to choose from domestically, why ever get involved anywhere there is even a hint of impropriety?
I’m not referring to such blatant idiocies as fraud or embezzlement — any behavior that reveals: poor judgement, stupidity, or even a lack of comprehension as to how the markets process information should be sufficent to remove the firm from your consideration for your portfolio.
Any complaints about shorts or analysts for that matter reveal a disturbing information deficit in the managers of a public company. The absence of intelligent responses to these issues is quite revealing of the managements capacity and/or abilities.
In my opinion, e-mails such as this one fall into the category of "Unfit to serve as CEO."
NYT: An e-mail message from Digital River’s chief executive to the analyst Jay Meier, after Forbes praised Mr. Meier for his skill as a stock picker.
Avoiding a company such as this means you are limited to the other 8,999 publicly traded companies out there.
See also: Risk Management of Fiasco Stocks
Also, with this post I add the category "Corporate Management"
They Shot the Messenger and Their Foot
NYT, October 30, 2005