Cisco is a major user of pooling, and is actively resisting moves to ban it. Cross ownership and related back-scratching Cisco was also criticised in a recent WSJ article about related party transactions and the relationships it has with its customers and suppliers, either directly or through personal holdings by its executives. This is something that Microsoft is increasingly doing. There are several similarities between cross-ownership and Japanese keiretsu. The resulting quasi-cartels may gain some added stability, but too often the consumer suffers as a result of higher prices and reduced competition.
Auditor independence is critical if there is to be any credibility in the accounts of a company.
Even worse, in many cases the consultancy branch of the auditors not infrequently has another business relationship with the audit client and sells its products and services to other clients. The big five have found that their consultancy businesses already generate more revenue and are growing three times faster than the auditing businesses. Stock options Stock option schemes are widely accepted as a useful way to incentivise employees by giving them a share in the success of a company - and some 10 million people in the US now receive them. American companies do not have to set the stock options they grant against their earnings. This is currently the case in the UK as well, although recently the UK Accounting Standards Board proposed that the estimated present value of the options should be set against earnings.