Dirt Diggers Digest Guide to Strategic Corporate Research
By Philip Mattera
Director of the Corporate Research Project and Publisher of the Dirt Diggers Digest
Companies are like people: they need relationships to survive. These include, for example, relationships with those who buy the firm’s products, those who invest in the company and those who lend it money. When you are involved in a corporate campaign against a company, chances are that you will end up intervening in these relationships in some way, since this is often the most effective way to get a corporation’s attention and persuade it to abandon socially irresponsible policies.
If you are researching a large company, there is a good chance that it has subsidiaries or is itself a subsidiary of a larger corporation. This is vital information for any campaign.
An indication of where a particular company fits into a corporate hierarchy may be obtained from sources such as Dun & Bradstreet (Part I); public companies must provide a list of subsidiaries in Exhibit 21 of their 10-K. The Croctail website contains a search engine for these lists.
The fact that a company is publicly traded does not necessarily mean it is an ultimate parent. It is not uncommon for large companies to make a public offering of stock in a subsidiary while retaining a majority of the shares. Private equity firms may do the same.
The most complete data on corporate family trees can be found in a subscription database called Corporate Affiliations, which is published by Lexis-Nexis and is available via larger libraries.
To identify foreign parents, use Uniworld Online, a subscription database that combines the content of what had been two products called Foreign Firms Operating in the United States and American Firms Operating in Foreign Countries.
Outside directors – i.e., those who are not are not members of management – are supposed to serve as watchdogs, protecting the interests of shareholders against transgressions by executives of the company. As various corporate scandals have shown, outside directors often look the other way or are oblivious to accounting and other forms of fraud. Nevertheless, board members are ultimately responsible for the actions and policies of a company, so it is perfectly legitimate to put pressure on them when a company is trying to bust a union or otherwise act in a socially irresponsible manner.
As noted above, a publicly traded company’s proxy statement is the best source of information about directors, including their stock ownership, their compensation for serving on the board and their other affiliations. Proxy statements are not always complete when it comes to listing other affiliations (especially when they involve privately held companies or non-profits), so it is worth the effort to check other sources.
To search for references to individuals across all SEC filings, use commercial full-text search services such as Edgar Online, or, if you are willing to limit the search to documents issued during the past four years, the website of the SEC itself. The D&B libraries on Nexis and Westlaw have a file called Executive Affiliations that allows you to search for an individual’s affiliations with public and private companies.
A subscription service called Marquis Biographies Online (containing content that had been previously published in print form in Who’s Who in America and related volumes) contains more than 1.5 million biographies of prominent individuals; versions are available via Nexis or Westlaw. Keep in mind that the information is supplied by the subject, so there may be omissions or embellishments. The Social Register, available in larger reference libraries, has information on socially connected persons. Other ways of tracking down articles and other material on better known directors include EBSCO's Biographical Index and Gale's Biography & Genealogy Master Index, both which can be found in many libraries in print or electronic form.
If the director you are researching is a well-connected member of the power elite, also try plugging his or her name into a collaborative search engine called LittleSis. Its entries track social networks involving executives, directors, lobbyists and financiers--and the results can be displayed via a data visualization tool called Oligrapher. Other sources on individuals include subscription services such as Relationship Science, BoardEx, and the People Intelligence feature of S&P's Capital IQ.
The U.S. Treasury Department's Office of Foreign Assets Control has a search page for the Specially Designated Nationals and Blocked Persons list and the Foreign Sanctions Evaders lists.
Most big publicly traded companies are not controlled by individuals or families; instead, the largest portion of their stock is held by entities known as institutional shareholders. They include pension funds, university endowments and various categories of investment managers. These institutions wield enormous power in the stock market, so it is standard procedure to engage these investors in corporate campaigns. Sometimes the institutions can be allies, especially Taft-Hartley pension funds (those in which unions play a role in managing) or public employee pension funds (which are often susceptible to political influence). Many of these funds, as well as giants such as TIAA-CREF (the pension fund for many academics and employees of non-profits), may be sympathetic to campaigns that raise some issue of social or environmental accountability.
Dealing with institutional investors is a complicated process that you should not undertake without consulting shareholder activism specialists at groups such as the Interfaith Center on Corporate Responsibility or As You Sow.
Before engaging institutional investors, you need to know which ones have significant holdings in your target company. You can get a free list of the top ten on several websites, including Yahoo Finance (enter the stock symbol, hit enter, then click on Holders). Owners of 5 percent or more of the shares outstanding have to be identified in a company's proxy statement filed with the SEC (see Part I above).
To get the most complete data, you need to subscribe to a commercial service such as Vickers Stock Research, which provides a complete list of institutional holders plus an indication of whether the institution has voting authority for all or some of the shares.
Like outside directors, Wall Street analysts (who are employed by brokerage houses and investment banks) are a category of corporate watchdog that has turned out to be toothless. Corporate scandals of the 2000s featured cases in which analysts promoted dubious stocks to pump up initial public offerings handled by their employer—or else to expand their employer’s investment banking business.
The reputation of analysts may have been tarnished, but they remain important influences on the way in which companies are regarded by the market. For this reason, corporate campaigners continue to spend time communicating with analysts, making sure they aware of pertinent facts about the target company.
The best way to find our which analysts follow a particular company and what they have written about it is to search one of the online archives of analyst reports. The most comprehensive collection is assembled by Investext, which is now part of Thomson Research, a database available through some university libraries. The Business Insights service (see above) found on some public library systems also has a decent set of reports.
Borrowing money is one of the ways in which companies obtain the funds needed to build new facilities or buy other companies. Corporations may borrow from a single lender, from a group of lenders that form a syndicate to provide a large loan, or by issuing bonds or other debt securities. Corporate campaigns often focus on the role of major creditors, making an issue, for example, of the fact that a bank is lending money to a union-busting employer. The bank then becomes a secondary target of the campaign.
Publicly traded companies, which have to disclose the size of their debt, often (but not always) reveal which banks they are borrowing from. In many cases this is disclosed only by including a copy of the credit agreement in the exhibits to the company’s 10-K filing. Dun & Bradstreet often includes the name of a company’s primary bank in its information products. Bank lending to large companies is tracked in databases such as LoanConnector and DealScan.
The one group of institutional investors that have to disclose detailed bond holdings are insurance companies. This information appears in Schedule D of the Annual Statements that carriers have to file with state insurance departments. These can be obtained from the departments themselves or from the National Association of Insurance Commissioners. Schedule D information can also be obtained via an A.M. Best subscription service.
Another source of information on creditors, especially for smaller companies, are Uniform Commercial Code filings (UCCs). These are public lien documents that have to be filed when property is used as collateral on a loan. The UCCs indicate the names of the secured party (the lender) and the debtor (the borrower). UCC filings can be used when a company borrows from a bank or when it purchases equipment on credit.
UCC documents can usually be obtained from the same state office that is responsible for corporation filings (see above). They are also available on some official state websites or they can be found in the public records section of databases such as Nexis or Westlaw.
Companies are usually quite resistant to disclosing the names of their largest customers or suppliers. Publicly traded corporations have to reveal this information in their 10-K filing only if the company is heavily dependent on a small number of customers or suppliers, since that is a significant risk factor that investors need to know about. However, smaller companies may list the larger firms they do business with in order to impress investors.
For this reason, useful information about your target company’s customer or suppliers may not come from the company’s own SEC filings but rather from those of other public companies it deals with. You would find this out by doing a full-text search of the entire EDGAR database (see above) for references to your target company. You can use one of the commercial services such as Edgar Online or the SEC's own EDGAR database if you don't mind having the search limited to documents from the past four years.
Another approach is to take advantage of the fact that many companies will brag about their dealings with large companies on their websites and will often provide links to their major customers’ sites. Google allows you to search for links to a particular site, so you can enter your target company’s domain names and see what links turn up.
See also the subscription database FactSet Supply Chain. If you want to know which companies supply a particular product, the best source is ThomasNet, the web successor to the Thomas Register printed reference work.
Among a company’s customers, perhaps the more significant are government agencies, since a corporate campaign can demand that an anti-union or socially irresponsible firm not enjoy the privilege of doing business with the public sector.
Some states put contract information online through the websites of their procurement agencies. The website of the National Association of State Procurement Officers has a map with links to these sites. Otherwise, you can contact the relevant agency directly (and may be asked to file a freedom of information request). A subscription website called Onvia provides data on state and local government procurement opportunities.
Information on federal contracts has traditionally been available through the Federal Procurement Data System, produced under the auspices of the General Services Administration. That information is now fed into the official USA Spending website.
Brand Names, Trademarks & Advertising
Public companies usually mention their leading brands in the portion of the 10-K that describes the firm’s operations. For a comprehensive list of brand names and the companies that own them, consult reference works such as Brands and Their Companies which is published in print form by Gale and in electronic form as part of the Gale Directory Library. Some of this information is contained in the company profiles on Gale's Business Insights database service available from many public library systems. The StoreBrands Buyers Guide is a directory of private label supplier companies.
Information on company trademarks (as well as patents) can be found at the website of the U.S. Patent and Trademark Office.
The leading reference works on advertising, known informally as the Red Books, are the Standard Directory of Advertisers and the Standard Directory of Advertising Agencies. You can purchase online access to the books. The content is also available on Nexis. For a list of the leading national advertisers, see Ad Age’s annual compilation (click on Data Center). Also see the AdAge Data Center available on some university library systems.
For information on which companies are sponsoring which events, see Sponsorship.com.
Market Shares and Market Research
Gale publishes an annual volume called Market Share Reporter that collects data from trade journals and other sources on the rankings of the top companies in a large number of business sectors. It is available electronically on Nexis. Also see the market research reports contained in databases such as MarketResearch.com and IBISWorld Industry Market Research available via some university library systems. ReportLinker is a pay service that provides access to reports from a variety of sources.
Trade shows are events at which companies display their wares to customers and potential customers. They are thus useful for gathering intelligence about a company’s marketing plans. Some corporate campaigners also find them useful opportunities to put public pressure on a company. To learn about upcoming trade shows at which your target company may exhibit, check websites such as TSNN or Exhibitor.
Exports and Imports
The leading sources of data on international shipment of goods are the subscription services PIERS (Port Import/Export Reporting Services), Import Genius and Panjiva. The latter provides profiles of global suppliers, including data on their shipments.
Large companies in industries such as restaurants, lodging and retail earn revenue by franchising their trademarks and/or business methods. Franchisors are required to provide potential franchisees with a disclosure document (formerly known as the Uniform Franchise Offering Circular), the contents of which are regulated by the Federal Trade Commission. Copies of these documents, which include details on the franchisor, can be obtained from pay services such as FRANdata and FranchiseDisclosures. A few states such as Minnesota and California post franchise disclosure documents online. The FRANdata Franchisee Database is available on Nexis.
Updated December 14, 2019