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Shareholders shortchanged

Friday 28th April 2000

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Special report by Nick Stride

Billions of dollars of shareholder value are being destroyed in the stockmarket's top companies but Treasurer Michael Cullen says it is a problem for the private sector to address.

An ANZ Bank study shows the companies comprising the NZSE40 index destroyed $1.2 billion of economic value in 1999 alone.

ANZ head of corporate banking Joseph Healy briefed the Treasury on its findings in late March and has called for a working group to study the problem.

The group would examine whether, for instance, public companies should be forced to report to shareholders in economic value-added terms as well as traditional accounting terms.

Dr Cullen said yesterday that ANZ's work was "very interesting" and raised some valid points.

But the problems identified were mainly a matter for the private sector to address. If submissions were made to the government he would be interested to receive them.

ANZ says there is little doubt companies' disastrous track record in wealth creation is hurting this country's economic performance.

Figures released last week show New Zealand has slipped another notch in world competitiveness rankings.

The annual study by the Swiss-based International Institute for Management Development ranked New Zealand 21st out of 47 countries for overall competitiveness. New Zealand's ranking has slipped almost every year since 1995 when it was in ninth place.

Ratings for the "brain drain" - 41st out of 47 - and export growth - 46th - were particularly weak.

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