Infectious Greed: Restoring Confidence in America's Companies [Hardcover]

John R. Nofsinger (Author), Kenneth A. Kim (Author)

Book Description

Publication Date: January 23, 2003

Financial and corporate scandals have led to a fundamental crisis in the American corporate system: one in which investors believe they have been thoroughly betrayed by the managers, boards, accountants, and investment advisors they once trusted. The fundamental challenge is to restore confidence, but how? Tougher laws, while essential, aren't enough: they've already been passed, and investors are as disillusioned as ever. In Infectious Greed, John Nofsinger and Kenneth A. Kim begin with an insightful assessment of what really happened: how executive compensation systems have led to unethical and greedy behavior; and how monitoring systems and regulators failed. Next, they offer systematic solutions that align incentives to promote desirable actions and discourage unethical behavior. Their solutions build on what's best about capitalism, and can truly restore the investor confidence that is essential to the system's long-term success.

Editorial Reviews

From the Back Cover

Financial scandals have led to a fundamental crisis in the American corporate system: investors believe they have been thoroughly betrayed by the managers, boards, accountants, and investment advisors they once trusted. The fundamental challenge is to restore confidence, but finger-pointing and tougher laws simply won’t be enough.

John Nofsinger and Kenneth Kim begin with an insightful assessment of what really happened: how executive compensation systems have led unethical and greedy behavior, and why monitoring systems and regulators failed so completely. Next, they identify powerful reforms that realign incentives to actively promote integrity and discourage malfeasance. In so doing, they offer the first real prescription for restoring investor confidence in both the short- and long-term—and for getting the U.S. economic system back on track.

Investor trust: the U.S. economy’s “secret ingredient”

Why restoring investor confidence is crucial to restoring economic vigor

Why the corporate scandals really happened

Greed doesn’t explain everything

Who did what, and how they did it

CEOs, boards, auditors, analysts, investment firms: a realistic performance assessment

Not just laws: a market-driven approach to reform

Incentive-based reforms that will really work

Restoring investor confidence: a tough, realistic, incentive-driven plan.

“Nofsinger and Kim have written a book that is both timely and important. Encompassing issues from boards of directors to accountants to analysts, it is a clear exposition and analysis of topics that have filled the front pages of daily newspapers for the last year.”

— Erik Sirri, Babson College and former Chief Economist of the U.S. Securities and Exchange Commission

Enron. Andersen. WorldCom. Tyco. Adelphia. Corporate scandals have shaken investor confidence more than any event since the Great Depression. Without investor trust, American capitalism can never regain the vigor that has made the United States the world’s most dynamic economy. In Infectious Greed, two financial experts offer a powerful new explanation of why the scandals happened—and realistic solutions that leverage the immense power of markets and self-interest.

John Nofsinger and Kenneth Kim show how the system came to provide massive incentives to greedy CEOs, ignorant boards, willfully blind auditors, and dishonest investment houses. They also show how those “bad” incentives can be replaced by even more powerful incentives for honest stewardship and counsel—and how the right incentives will do more to restore investor trust than politicians ever could.

About the Author

JOHN NOFSINGER, finance professor at Washington State University, is author of Investment Madness, The Psychology of Investing, and Investment Blunders (Financial Times Prentice Hall). Widely acknowledged as one of the world’s leading experts in investor psychology and behavioral finance, he has been quoted in financial media including The Wall Street Journal, Fortune, BusinessWeek, SmartMoney, Bloomberg, and CNBC, and other media from The Washington Post to Wired.com. Nofsinger’s 1997 paper “Herding and Feedback Trading by Institutional Investors” (written with Richard W. Sias) was awarded “Best of the Best” and “Best Paper in Investments” by the Financial Management Association. He has also done advanced research for the New York Stock Exchange and the Association for Investment Management and Research.

KENNETH KIM is a finance professor at the State University of New York at Buffalo. His work has been published in the Journal of Finance, the Journal of Corporate Finance, the Journal of Banking and Finance, and other leading journals. Kim is co-author of the textbook Global Corporate Finance, and he has served as a financial economist at the U.S. Securities and Exchange Commission, where he worked on diverse issues including M&A regulation.

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Product Details

• Hardcover: 320 pages
• Publisher: Financial Times Prentice Hall; 1st edition (January 23, 2003)
• Language: English
• ISBN-10: 0131406442
• ISBN-13: 978-0131406445
• Product Dimensions: 9.3 x 6.3 x 1.1 inches
• Shipping Weight: 1.5 pounds
• Average Customer Review: 5.0 out of 5 stars  See all reviews (3 customer reviews)
• Amazon Best Sellers Rank: #2,915,559 in Books (See Top 100 in Books)

More About the Author

John Nofsinger is a Professor of Finance and the Nihoul Faculty Fellow in Finance at Washington State University. He is one of the world's leading experts in behavioral finance and is a frequent speaker on this topic at investment management conferences, universities, and academic conferences. He has often been quoted or appeared in the financial media, including The Wall Street Journal, Financial Times, Fortune, Business Week, Smart Money, Money Magazine, Washington Post, Bloomberg, Nightly Business Report (NBR), and CNBC, and other media from The Dolans to TheStreet.com.

He has authored/coauthored eight trade books, textbooks, and scholarly books that have been translated into seven different languages. John is also a highly successful scholar. He has published more than 30 articles in prestigious scholarly journals (like the Journal of Finance and Journal of Business) and practitioner journals (like the Financial Analysts Journal and Journal of Wealth Management). He has also conducted research for groups such as private investment firms, the New York Stock Exchange, the CFA Institute, and policy think-tanks. His academic research activities have won many awards.

Customer Reviews

Most Helpful Customer Reviews

2 of 2 people found the following review helpful:

5.0 out of 5 stars Easy to understand text explaining corporate culture., April 3, 2003

By 

William R Ferland (Smithfield, RI United States) - See all my reviews

This review is from: Infectious Greed: Restoring Confidence in America's Companies (Hardcover)

I would recommend this book to anyone interested in understanding the culture and ethics that have lead to the numerous scandals the economy has been faced with as of late. If you are an investor or the board member of company, this text is worth reading. The investor benefits from a door being opened into companies that practice unethical financial practices and provides an investment warning. A board member, or anyone hiring an executive that has more interest in the long term viability of their company than the short term gains and rapid fallout associated with using accounting tricks to mislead the public will gain insight into the type of individual and practices that should be avoided at all cost. What these companies have done goes far beyond their employees and shareholders. It has shaken the whole economy.

5.0 out of 5 stars The Best Book of This Kind, March 3, 2003

By 

Steve Kim (Plymouth, MI United States) - See all my reviews

This review is from: Infectious Greed: Restoring Confidence in America's Companies (Hardcover)

I think that every MBA student and practitioner should read this book not to repeat another accounting scandal and not to mess up our economy again.

0 of 1 people found the following review helpful:

5.0 out of 5 stars The Best Book of This Kind, March 3, 2003

By 

Steve Kim (Plymouth, MI United States) - See all my reviews

This review is from: Infectious Greed: Restoring Confidence in America's Companies (Hardcover)

I think that every MBA student and practitioner should read this book not to repeat another accounting scandal and not to mess up our economy again.