Recent reports of misconduct at corporate giants like Enron, Merrill Lynch, Arthur Anderson and Worldcom have made investors wary and prompted the U.S. Congress to begin updating business regulations. Polls indicate public trust in corporations has diminished sharply. In a recent Harris Poll, 75 percent of respondents said they had little or no confidence in the people who run major corporations.
Harris Poll Chairman Humphrey Taylor says other polls further underscore the public's disillusionment with big business. "In April we released a survey in which we asked who has too much power or influence in Washington, and big companies came out the worst as having too much power," he said. "Eighty-seven percent of the public thinks they have too much power. That's not business in general, but big companies."
During the 1990s, when the New York Stock Exchange was soaring and many citizens were enjoying the ride, Rice University management professor Steven Currall says there was very little corporate scrutiny. But as stocks have fallen and improprieties have come to light, he said, attitudes have changed.
"I think we have seen a real watershed in the past three to six months in the demands that investors are having for financial transparency," said Mr. Currall, "and in the long run, I think this is really a good thing, because I think that much of what we are seeing now is not necessarily new. It was just disregarded in the past five or ten years."
But in the short run, Steven Currall predicts, Wall Street will suffer as investors' enthusiasm continues to wane. "It's not that the stock market cannot run up from here, but it's sort of like a runner with leg weights. The runner can still run, but it takes a lot more effort to run at the same speed in light of these concerns about financial transparency," he said.
But is the present aura of distrust really new? Harris Poll Chairman Humphrey Taylor said the latest corporate scandals have just confirmed a traditional public prejudice. "Americans have always been very pro business, pro competition, pro free market," he said. "They believe in the marketplace in a way I think no other country does, but that doesn't mean to say they like big business. They like small and medium sized businesses. They are always deeply suspicious of the power of big business."
This time around, Mr. Taylor predicts, that suspicion will result in corporate reforms and stepped up regulations.