This is a "bee in my bonnet" post, on two topics.

First, (by way of background for this one, BTW, I'm Canadian), I saw an article at http://www.moneysense.ca about volunteer liability. Specifically, the question related to whether a volunteer had any legal liability for work done as a volunteer. The reply, basically, was "your group should carry insurance, but, just to be sure, ask their lawyer". It ignored the fact that many smaller volunteer groups can't afford either lawyers or liability insurance (in Canada, this can run $2,000 to $5,000 a year).

The law in Canada, as I understand it, is that a volunteer has an obligation to do the job they've volunteered for to the best of their ability. None of this "it's free, so what do they expect" stuff. Failure to do so opens the person to legal liability. Given the amount of litigation in the US, I imagine the laws are similar there, too (I'd be interested in hearing, though).

The situation is even tougher for volunteer directors/officers. If the organization does something which results in a lawsuit or a criminal proceeding, the directors have both criminal and financial responsibility. Of course, insurance doesn't help you do the jail time or pay the fines, but it might pick up legal costs (which can be substantial).

So, the more complete answer is "yes, you have liability, although the level and consequences may vary. You should see your own lawyer." I wanted to post this, because I think this is an important issue, and the columnist did the questioner a disservice.

My other issue today is this whole business responsibility thing going on in the US. I can't figure it out. Part of it, I suppose, is the erosion of the concept of market value. It's no longer enough to be profitable and show growth; you have to have a sexy concept to catch the market's attention. That, of course, is what was behind the dot com boom (and bust). The problem with sexy concepts is they are transitory. And falling back on bogus earnings is a very poor substitute for real value. I mean, if you know it's the concept that builds share value, you have to accept that, when the trend moves in another direction, your share price is going to fall. Supporting it by faking revenue and expenses, or inflating the balance sheet, isn't going to help you.

Part of it, of course, is that shareholders (especially institutional shareholders) are more interested in capital appreciation than they are in revenue, and they take a fairly short-term view. By looking for true value (that is, earnings-based value), investors can build a solid portfolio that should show some appreciation and, ideally, generate revenue as well. But it has to be a long-term process; you can't pick stocks on a quarter-to-quarter basis and expect to sustain any kind of long-term growth. You are bound to make mistakes, and the market will hand you your head (by giving you poor growth figures). Witness those who figured that dot coms and communications were the big thing, and invested most of their funds in those companies. Sure, they showed great growth for a year or so, but now, things aren't so rosy. I expect the value of their holdings would be maybe a tenth of what they paid in those oh-so-optimistic days of the late '90s.

So investors have some responsibility, and they have encouraged certain behaviours in management. Where, however, have the concepts of ethics and morals gone? How is it that none of these poeple seem to have acquired a strong base when they were younger? This one, I can't answer. And I'm not being smug or anti-American here. We have our own examples in Canada of CEOs who have let their egos run away with them. They have destroyed millions (if not billions) in shareholder value, and have been richly rewarded for it.

Anyway, that's my two cents for today. Comments?

Thanks for reading!

David