Should investors be worried? After all, it's very probable that Glaxo's recent troubles with various authorities are no more than the actions of rogue individuals operating far out of the reaches of HQ - the CEO of a multinational pharmaceutical group is hardly likely to be signing the cheques to a few foreign doctors so that a salesman can up his bonus.
Unfortunately for Glaxo’s CEO - or indeed the boss of any large group - what his many thousand employees get up to can have a serious impact on the company's reputation, and therefore its share price, and it's why the 'see no evil, hear no evil' defence shouldn't really cut it. The CEO, after all, is the guy ultimately responsible for making sure checks and balances are in place.
That's being generous, too, because the idea of the lone gunman often requires a willing suspension of disbelief anyway. Take the banks' motley crew of rogue traders; we know that some senior bosses knew about Libor fixing, and years of PPI and other assorted mis-selling hardly went unnoticed at the top. And the regularity with which these scandals keep cropping up in the world of big business would almost suggest that there is, if not board level complicity then a lot of turning a blind eye. It’s hard to believe that the management of certain defence companies, for example, don’t know that certain palms need to be greased to land massive arms orders.
Yet – with a pragmatic hat on - this is the way much of the world still works, and as a shareholder you may very well argue that you'd rather your business bent a few rules to boost the bottom line than the competitor you're not invested in. That doesn’t make it right of course, and any investor of an ethical persuasion may be asking themselves whether they’re prepared to stomach this sort of behaviour – or indeed whether they’re prepared to stomach the risk of a G4S-style blowup when caught. It also raises the age old question of governance, especially as most multinationals are now so large that they are all but unmanageable.
Fortunately we have Aim, home to some of the best-run smaller companies in the world – and some quite big ones, too, which you can read about in the second part of our Aim 100 review. And while many still perceive Aim as too risky for private investors, it's worth putting that reputation into the context of the recent goings on in the FTSE 100. The junior market no longer deserves its Wild West image any more than its blue-chip big brother.
