Why a Broader Probe Won't Sway Wal-Mart Investors
Earlier this year, The New York Times published a blockbuster story reporting that Wal-Mart had relied on bribes to build its fast-growing business in Mexico and that the company had then covered this practice up.
In response to the paper's inquiries, Wal-Mart launched an investigation into what happened, which is ongoing.
And now, in an SEC filing, Wal-Mart has announced that it has expanded its bribery investigation to other countries, including China, India and Brazil.
Although many people feel that bribes are simply a cost of doing business in some countries, bribery would be a violation of the Foreign Corrupt Practices Act. It would also not be in keeping with the brand image Wal-Mart wants to project. So the findings of its investigation could lead to another splash of mud on Wal-Mart's image.
But does the investigation really matter to the stock price ?
No, says Yahoo! Senior Columnist Michael Santoli.
Whatever price Wal-Mart will have to pay for violating the FCPA, the price will likely be small in relation to the company's profits. And the investigation is also old news that won't likely have an impact on on Wal-Mart's future results.
What Wal-Mart investors care most about are Wal-Mart's future earnings. And the reason Wal-Mart's stock has dropped in recent weeks, Santoli says.
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