Wednesday, November 11, 2020

Seeking Virtue in Finance by JC de Swaan

This book’s full title is Seeking Virtue in Finance: Contributing to Society in a Conflicted Industry. He is talking about how finance professionals can be ambitious but still do good for our society. At the Princeton Ed site, you can get a list of articles by JC de Swaan. The link is here. However, you cannot read a lot unless you have a subscription to the particular journal that he wrote in.

JC de Swaan talks about his four pillars of ethics in finance. They are that you should serve customers faithfully, do not extract value from others (or the rest of society), treat colleagues with dignity and as much as possible apply your skills and resources to the collective interest. He said he looked for people to talk about who we could relate to that were self-interested and successful but individuals who were able to balance their self-interest and the collective interest.

Part of the book is on outstanding people in finance. It is interesting to read about people who are outstanding in finance and can motivate others to follow their lead. He comments that none are perfect, but you are also dealing with people and people are never perfect. He talks a lot about Jack Bogle who start Vanguard. Vanguard is a mutual company which deals in passive investments. Their products are ETFs. Clients believe that they are being treat well and they are.

Another person he talks about is Jack Welch the CEO of General Electric who said that shareholder value is the result not a strategy. He said your constituencies are your employees, your customers, and your product. I make my living by investment and I do believe that for long term success, a company needs to treat both customers and employees well and also produce something that people want.

One thing I look at when investigating companies, is the diversity of the Board of Directors. I look at how many females there are and how many minorities there are on the board. I figure that if having more females on boards improve the company’s performance, so should having minorities. Perhaps I should also look at top management also. JC de Swaan quotes McKinsey that looked at diversity of top management in UK, US, Canada, and Latin America. What they found was that companies in the top quartile of gender diversity were 21% more likely to outperform and that companies in the top quartile of ethnic and cultural diversity were 33% more likely to outperform.

There is a review of this book on Bokus. The review is in English, but most of the site is not. If you into podcasts, there is one on New Books Network stie. The interview of JC de Swaan by Daniel Peris starts just after 1 minute.

Tiger Gao and Roopa Venkatraman interview Jean-Christopher de Swaan on Policy Punchline about this book. JC de Swaan does a video lecture for Center for Public Policy & Financer. Knut Rostad interviews JC de Swaan for the Institute for the Fiduciary Standard. JC Swaan said at the end of the interview that the next thing for the industry might be checklists.

An index of the books I have reviewed are on my website at Books. I have three blogs. The first talks only about specific stocks and is called Investment Talk . The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter.