The wave of sexual misconduct scandals that has hit the entertainment and corporate worlds in 2017 will have investment repercussions in 2018, private equity giant KKR (NYSE: KKR) warned clients.
The firm has said investors should be on the lookout for companies whose executives get into trouble, though it also cautioned that the options to protect against such events are limited.
One thing investors can do, though, is use corporate governance criteria and examine companies' history in dealing with personnel issues and harassment allegations. Social media has served as an effective conduit to expose harassment scandals, and will continue to do so, KKR said in its 2018 market outlook.
Misconduct cases have cut across a wide swath of the business world, a situation that accelerated after multiple women came forward and accused Miramax founder Harvey Weinstein of a pattern of assault that stretched over decades.
The allegations quickly spread to politics and corporate board rooms.
With victims feeling more empowered to come forward, the issue likely will remain prominent in the year ahead and beyond.
The warning came as part of KKR's broader market forecast. The firm believes the year ahead likely will continue to be positive for risk assets like stocks — the banking sector in particular — though 2019 could bring a "mean reversion" that will benefit real assets over financial assets.
The equity company saw its shares gain 19 cents to $23.04, within a 52-week trading range from $16.77 to $23.32.
