Bolkestein speech: Speeding up the Consolidation of European Financial Markets

11 July 2002

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“Financial markets are nervous”, Mr Bolkestein stated in his speech held in Paris today. “First, because of the quantity and magnitude of accounting and corporate governance scandals. Second, doubts about the timing of economic recovery in the US and the EU. Third, continuing uncertainties about terrorism; and the international climate more generally”, the Commissioner went on and draw up a set of lessons and actions to take.

Five immediate lessons:

It is of central importance that investors and financial markets have company accounts that are a true and fair statement of the health and wealth of companies

Any company payment system that over-rewards managers on the basis of share price performance rather than by a balanced remuneration package clearly risks creating perverse incentives

The need for an efficient set of European take-over rules

Investors or their professional advisers must therefore pay far more attention to the companies they invest in

It is in companies' fundamental economic interest to work to the benefit first and foremost of their shareholders

Five Actions that we need to take in the EU

expand the High Level Group of company law experts to include specific corporate governance issues that recent scandals had highlighted

take measures to raise investor confidence in the numbers, through improvements in accounting standards

look even more intensively at the way the audit profession is regulated

minimise risk by applying rigorously determined and agreed risk-based prudential rules.

further consultations on disclosure requirements that should apply to companies

Bolkestein speech: Speeding up the Consolidation of European Financial Markets

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