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Investor Confidence in Financial Information Remains Low
Faith in Corporate America’s Ethics Not Yet Restored

Bedminster, N.J. (5 December 2002) - Despite efforts by the Federal Government to limit financial accounting abuses, only 9% of individual investors now say they are “very confident” in financial information provided by publicly traded companies, according to an Investor Confidence Tracking Study conducted by Rating Research LLC, a joint venture between The RatrixSM Group and Opinion Research Corporation (NASDAQ:ORCI). This represents a very modest improvement since the lows reached in the summer months when corporate scandals were headline news on a daily basis.

"Despite legislative initiatives by the federal government such as Sarbanes-Oxley and well-publicized images of senior executives in handcuffs being “brought to justice”, investors' confidence in the financial markets’ integrity and transparency remains low, " said Matthew Molé, co-founder of Rating Research. "This reflects the devastating blow that recent scandals have dealt the reputation of Corporate America. It will require a vigorous and sustained effort on the part of governmental institutions, Wall Street firms, issuers themselves and other market players to restore investors' confidence. In this case, the passage of time alone will not cure the widespread malaise that has befallen the financial markets.”

The Rating Research Investor Confidence Tracking Survey included interviews with approximately 500 investors in separate waves in May, June, August and early November 2002.

Ethics Remains a Sore Spot

This lack of confidence in financial information is presumably tied to investors’ continued distrust in the ethics of senior management. A paltry 5% of individual investors say they are “very confident” that senior leadership of publicly traded companies engage in ethical business practices. This measure has shown virtually no improvement since the tracking study began last spring.

“Most companies’ response to the recent scandals has been to shore up their internal governance procedures. We suspect investors share our perception that governance is about legal compliance, while ethics is about character and integrity,” Mr. Molé continued. “Until corporations visibly demonstrate those traits, investors will be very reluctant to rush headlong back to the stock market.”

Reputation Remains Center Stage

Investors also continue to indicate that information about a company’s reputation is important to them. In the latest wave of the survey (conducted Nov 1 – 4, 2002), 58% of investors – almost six in ten – say information about corporate reputation is more important to them today than it was a year ago, slightly less than in the August wave. In contrast, investors do not believe that corporate CEOs are sufficiently focused on the reputation of their companies. Only 34% — slightly more than one-third — of investors believe CEOs are appropriately focused on it.

Rating Research LLC is a firm specializing in the assessment of corporations’ reputation and other intangible assets.

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More details on the survey and methodology are available.