Lesson for Finance: The Case of the Very Angry CFO

Who is Chris Lee and why did his company's stock price fall 4% in one day -- and continues to be something of a target of short-sellers? 

A CPA and chartered accountant, Lee is CFO and Joint Company Secretary of Hong Kong-listed maker of point-of-sale payment solutions PAX Global Technology. He was apparently so incensed during an earnings briefing on August 10 that he refused to continue his presentation until an analyst from Macquarie Group left the room.

In a video on The Wall Street Journal, Lee is shown telling a seated Timothy Lam: "I didn't invite you. Out . . . Escort him out, now!" Tweeted Journal columnist Jacky Wong "A bearish analyst got kicked out of an earnings briefing by the CFO."

What not to do

The market reaction shows why no CFO should ever act this way. The stock price fell 4% on August 10 and another 0.6% on August 11 -- down by half since its peak last year. According to Bloomberg News, short interest in the stock had spiked before the incident, climbing to a record of 10.3% on August 3, from 1.6% a year ago.

Some attendees were appalled. "If someone with that temperament is leading up the finance department, which is arguably one of the most important, perhaps it raises questions on how that department is run," Bloomberg quotes Ryan Roberts as saying. He is a Hong Kong-based analyst at MCM Partners.

Analysts at Nomura lowered their recommendation on the stock to 'reduce,' from 'neutral.' In a research note, the wrote: "While we do not judge this dispute, we think this may hurt PAX Global's shareholder value."

Before the incident, Macquarie's Lam had been the only analyst to be underweight on the company. "We believe all analysts should be able to attend analyst briefings, regardless of their view on the company," he wrote in a research report, "Asked to Leave the Meeting."

Damage control

Lee issued a statement on August 10, characterizing his behavior as a "one-off" that does not reflect management's position. He said he welcomes "diverse points of view." Reached the day before by Bloomberg, he said Lam wasn't invited to the briefing and was asked to leave because PAX Global disputes parts of his report, not because he has a bearish rating.

The obvious lesson for CFOs: Never lose your head. Let the numbers and your even temper tell the story. It doesn't pay to fight with anyone in public.





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