Short for directors' and officers' liability insurance, a type of insurance policy taken out to protect the directors and seniors executives of corporstions against being sued as individuals for negligence on the part of their company. The cost of such insurance can be high, especially in the litigious United States where such suits can result in multi-million-dollar awards. It is sometimes known as indemnity insurance.


A legal award of monetary compensation to a person or business who has suffered loss or injury caused by another. For example, a business may have suffered a loss as a result of a breach of contract, or an employee may have been injured as a result of using an unsafe pice of equipment at his or her place of work.


A collection of information stored electronically on a computer.

Data Mining:

The use of sophisticated computer programs to seach systematically through a large database. Such programs are particularly useful to marketing departments which want to identify a subset of a large population (all the males in Arkansas, for instance, whose birthdays are next Monday).

Data Warehousing:

The process of organising the storage of large quantities of electronic data in such a way that it best meets the needs of the organisation to whom It belongs.

Data Protection:

The right of individuals to have access to information about themselves that is held by other parties, such as financial institutions, credit-rating agencies or government offices. Individuals usually have to submit a formal request to gain access to the information. Such rights are established in many countries by so-called data protection legislation.

Date Stamp:

A mark on perishable goods indicating the date by which they should be sold, and also the date by which they should be consumed. In many countries date stamping is required by law.

Dawn Raid:

The purchase in the early hours of the morning, as soon as the stockmarket opens, of a substantial chunk of a company's shares, frequently to strengthen a subsequent takeover bid. Hence, any early-morning business practice that is designed to catch someone (especially a competitor) unawares.


The Drug Enforcement Agency (U.S.).


A time scheduled for the completion of a task commonly used to describe the time by which journalists must file their stories to their newspapers. If deadline that has been set in a contract is not met, legal consequences may follow.


A person who deals in goods or services, buying them in his own right to sell them on to someone else. Contrast with a broker, who never takes title to the goods he is broking.


A debt that is secured only on the good name of the borrower. It has no charge on the borrower's assets.

Debit Card:

A rectangular plastic card with a black magnetic strip on the back that can be used to purchase goods and services. A debit card is a bit like a credit card, but with one crucial difference. A debit card pays for the goods immediately out of a bank account womewhere. If there is no credit in the account the purchase will not be authorised. A credit card, however, allows payment to be made later and provides the user with a loan to make the purchase.


A management practice in which an employee describes their experience (with, say, a potential overseas customer) to others within their organisation. The idea is that everyone should learn from the experience of each individual. This is at the heart of a learning organisation.


An obligation on a person or organization to pay something (usually money) to another person or organization.

Debt-equity Ratio:

The ratio of a company's debt to its equity, more commonly known as gearing, or in the United States as leverage. If the ratio is high, banks are reluctant to lend the company more money.

Debt Service:

The ability of an organization (be it a company or a country) to service its debts – that is, to pay interest and capital as and when due – out of its cash flow.


A person or organization that owes somebody something.


An unsecured bond backed only by the general credit of the issuing corporation.

Debit, Credit Card:

Almost as tricky to get these days as the good old 'Credit, Credit Card'', a debit card is directly tied to a bank account. Whatever charges the user runs up are debited to the bank account, and monthly statements do not carry a remittance slip. The same account may have a checkbook tied to it as well. Credit as such, however, is not extended since you are not allowed to use the card if the balance on the bank account wanders into the red.


The process of moving corporate functions (and the decision-making powers that go with them) away from a company's head office. Many companies are highly decentralised in some respects (say, marketing) and highly centralised in others (accounts or human resources).

Decision Tree:

A diagram that illustrated the consequences of making different decisions, and of the decisions that flow from those consequences.

Declaration of Trusts:

A document creating a trust. For ultimate anonymity, a trust may be created in certain jurisdictions by a trustee or a trust company without the settlor either being identified or being a signatory to the declaration. In contrast settlor and trustees sign a trust deed.

Declining Balance:

A method of depreciation that depreciates an asset by a fixed percentage of its outstanding value at the end of each year, instead of by a fixed percentage of its original value.


An expense that can be deducted from a company's revenue for the purposes of calculating its tax liability.

Deep Discount:

A large discount on the price of goods or services, probably more than 25%.


Substantial Holding Company (in the Netherlands).

Deemed-Paid Credit:

An offset against an income tax payable to the country of the parent corporation for income taxes paid by the foreign subsidiary in the foreign country on the earnings and profits out of which the dividend is distributed. The deemed-paid credit is also known as an indirect credit and is computed according to a specific formula as designated by the income tax laws of the country in which the offset is taken.


Not legally binding, as in defective title to a property. A defective title may have been obtained fraudulently, or there may have been an error in drawing up the contract.

Defective goods are those that do not meet the standard that a consumer might reasonably expect. In most countries a consumer is legally entitled to exchange defective goods or obtain a refund.


The postponement of a payment (or receipt) from one accounting period into another; for example, deferred tax.

Deferred Share:

A share in a company that receives no payment in the event of a liquidation until all preference and ordinary shareholders have been paid the nominal value of their shares in full. Deffered shares are usually held by people who have a special relationship with the company, such as its founders.


An excess of spending over revenue. This may be by a government (as in the federal budget deficit), by a country (as in a trade deficit), or by a company (which then needs to fund its deficit).


An across-the-board decrease in prices. Falling prices are dangerous for business since they can result in acompany having to sell its output for less that its cost.


The removal of layers of management from the middle levels of an organisation, thus flattening the organisation and shortening the lines of communication whithin it.


The transfer of authority from one person to another (who is generally lower down the corporate hierarchy). Delegation involves the transfer of authority but not of responsibility. Empowerment attempts to transfer both.


In business, the filure to make payments as and when they fall due.


The removal of a quoted share from a stock exchange's list, usually for failing to follow the rules of the exchange. A companyøs shares may also be delisted if the company has been taken over by another and has ceased to have an independent existence.


The transfer of the title to an asset from one owner to another. Thus a delivery note is the document authorising the transer; the delivery date is the date on which the transfer formally takes places.


A fundamental concept in economics (see also supply). The extent to which consumers are prepared to pay for goods and services. It is also the right to instantaneous gratification, as in payable on demand or demand deposit – money in an account that can be withdrawn on demand.

Demand Guarantees:

General term for payment undertakings arising on the presentation of a written demand (plus possible other documents specified in the guarantee), not conditional on proof of default by the principal in the underlying transaction. They ensure often that the lender will be paid the principal on maturity and possibly, depending on the instrument, interest when due. Example: SLC's.


The unravelling of a merger, or the separation of companies (or of business units) that are being run under one corporate umbrella.


The study of populations according to social characteristics such as their age, income, family ize, and so on. Demogrpahics is particularly helpful to advertisers and marketing departments.


The number of units of a single note or coin; for example, 1 D-mark, 10 francs, 100 dollars.

Department Store:

A large retail outlet that stocks a wide range of goods, from kitchen utensils to make-up. Traditionally located in the centre of big cities, department stores have been hit by the growth of out-of-town shopping malls and of city-centre rents.


There are several meanings including:
  1. Money left as security before the receipt of a service, as when renting an apartment.
  2. Money left with a bank for safe-keeping.
  3. Raw materials found underground, such as mineral deposits.

Deposit Account:

An account at a bank in which a customer leaves money for some period of time and on which the earns interest.

Depository Trust Company (DTC):

A custodial clearing facility owned by the major banks and securities firms and monitored by various banking regulatory agencies and the Securities and Exchange Commission.

Deposit protection:

A form of insurance which covers depositors against the loss of their money should their bank go bust. Deposit protection schemes are usually backed by the state, and they usually over only a percentage of the total deposits.


The loss of an asset's value as a result of wear and tear and the passage of time. Companies are allowed to set off this amount against their taxable profits – in theory enabling them to put aside untaxed funds with which to replace the depreciating asset at the end of its useful life.


A prolonged and steep decline in a country's GCP, a period when much industrial activity ceases.


The removal of government regulations and of red tape that restrict the ability of firms within an industry to compete freely. Industries such as telecoms, banking and aviation have been considerably deregulated in recent years.


Financial contracts whose values are based on, or derived from, the price of an underlying financial asset or price - for example, a stock or an interest rate. Thus an option to buy a share is a derivative. The option could not exist without the share, from which it is derived. Some derivatives are extremely complex creations.

Derived Demand:

Demand for things that occurs because of the demand for other things. Thus the demand for capital goods can be said to be derived from the demand for consumer goods. Once consumers start spending, producers begin to invest in plant and equipment.


Department of Education Standards (U.K.).

Desktop Publishing:

Using a collection of computers, software and printers that can fit on a desk in order to produce publications of a quality that used to be possible only in printing plants.


A lowering of the value of a country's currency vis-à-vis other countries' currencies. This can be done either by market forces or by government forces.


Someone who adds value to land by building on it or by otherwise turning it into an asset that can produce a stream of income.


The process of establishing the way in which a company's products or services differ from those of its rivals (how Pepsi tastes different from Coke, for example), and then reinforcing that difference in the consumer's mind by advertising and promotion.


The representation of data by a series of digits. In a digital computer, information is transmitted as a row of binary digits, 0 or 1, represented by "on" or "off". In an analogue (or analog) computer, information is represented by some variable physical property (such as an alectric voltage).


To reduce the value of existing shares in a company by issuing new shares at a price lower than the shares' current market value.

Diminishing Returns:

The phenomenon whereby the addition of extra resources to a production process fails to produce the same additional value. The law of diminishing returns is said to have set in.

Direct Cost:

A cost that can be directly attributed to a particular production process. Direct costs rise in proportion to the number units produced.

Direct Debit:

An instruction from a customer to a bank requesting the bank to debit the customer's account with whatever sums are demanded by a named creditor. Direct debits make life easier (and therefore cheaper) for organisations like telephone and electric utilities which receive payments that are regular in time but irregular in amount.

Direct Mail:

The sale and promotion of goods and services by mail. Direct mail is a fast-growing distribution channel in many countries, despite a widespread belief that most direct mail is thrown away unread.

Direct Marketing:

The selling of products and services directly to the final consumer by the original producer. Direct marketing cuts out intermediatries (such as shops) in the supply chain. But it often involves substantial costs in reaching the consumer in other ways; for example, by direct mail.

Direct Taxation:

Taxation that is imposed directly on an individual (for example, income tax) or a company (corporation tax). Contrast with indirect taxation.


Strictly speaking, a member of the board of a company who has been properly appointed by the company's shareholders to look after their interest. In many companies, however, people have titles containing the work director even though they are not on the board. In this context, a director is no more than a senior manager.

Dirty Float:

A government policy of generally allowing its currency's exchange rate to float freely according to market demand, but on occasions deciding to intervene in order to adjust the rate to suit other priorities. This is also known as a managed float.


The fullfilment of (and release from) an obligation. In many countries the restrictions on people declared bankrupt apply only for a certain length of time. At the end of that time, the bankrupt is said to be discharged.


The legal requirement of companies to reveal information to certain parties at certain times. Hence, for example, a director must disclose to fellow directors if he has a financial interest in a company to which the board is about to award a contract.


The verb to discount means to sell at a reduced price; the noun discount is the amount by which the price is reduced.

Discount Rate:

In general, the rate of interest that is represented by the discount to its value on maturity at which a financial instrument is sold. Thus if a $100 bond is due to be repaid in a year's time, and somebody is prepared to pay $95 for it today, the discount rate is the $5 discount at which the bond is being sold, divided by the $95 that is being paid for it (that is, 5.26%).

Discount Store:

A store selling a wide variety of goods, many of them at a discount to their normal retail price.

Discounted Cash Flow:

Popularly known as DCF, a method of calculating the present value of a future stream of income and/or capital. It discounts the future value of expected flows of cash in order to find their net present value.

Discretionary Trust:

A highly flexible arrangement in which the beneficiary has no fixed interest in any part of the income of the trust or its assets except perhaps at the termination of the trust. The Trustees usually hold the property and income for a broad class of beneficiaries to whom they distribute the assets at their discretion. However, the Trustees may be guided by an informal memorandum written by the settlor which outlines his wishes but has no legal status. One advantage of this arrangement is that benefits can be varied according to changes in circumstances with little difficulty. Another is that the beneficiary has a somewhat nebulous hope of receiving anything and therefore it is difficult for any creditors to find an interest to which to attach a liability.


Treating someone differently because of a particular attribute that they have, such as their sex, their religion, or their colour. In many countries discrimination in the workplace is illegal.


A slowing down in the rate of inflation. Not to be confused with deflation.


The process by which financial intermediaries are cut out of the business of allocating savings. This happens in a number of ways; for example, when companies raise equity directly from the public, or when governments promote savings schemes that attract money directly from consumers.


The part of a computer where information is stored and which acts as its memory. Floppy disks are light and detachable (but far from floppy) rectangular pieces of plastic and metal on which can be stored electronic data. They enable information to be transferred easily from one stand-alone computer to another. Optical disks and compact disks are disks that hold considerably more data than floppy disks . The non-detachable part of a computer's memory is called the hard disk.


The ending of an individual's contract of employment with an organization. Depending on the nature of the dismissal (for example, by redundancy) the individual may be entitled to a lump sum on the termination of the contract. If individuals think that they have been unfairly dismissed they may have the right to sue their employer.

Dissenters' Rights (U.S.):

Dissenters' rights or shareholder appraisal rights are a mechanism designed to protect minority shareholders. Business corporation laws prescribe the procedures by which these rights may be exercised. If a corporation proposes to sell substantially all of its assets or merge with another corporation, minority shareholders may be able to force the corporation to purchase their shares.


Dissolution and liquidation are procedures by which a corporation concludes its activities and prepares to liquidate its assets for the purpose of paying bills and creditors, and if funds remain, make distributions to shareholders. Dissolution can be voluntary, initiated by the corporation, or involuntary, initiated by creditors. When in dissolution, activities of the corporation must be geared to winding up corporate business, not expanding it.

Distress Sale:

A sale that occurs when owners of goods find themselves in a position of having to sell those goods at a deep discount – often because of cash flow difficulties.


There are two meaningss:
  1. The process of getting finished goods into the hands of consumers.
  2. The way in which something is shared out; a product in a particular market, for example, or wealth in a country.

Distribution Channel:

A route by which goods are distributed by a manufacturer to a final consumer.


The spreading of a company's risk by its participation in a number of different businesses. A move by an insurance company into retailing is one example of difersification. It is a way of ensuring that not all the company's eggs are in one industrial basket.


The selling off by a company of businesses that do not fit in with its general strategy.


A dividend is a distribution of cash or property by a corporation to a shareholder. Dividends are paid out of the corporation's net earnings and profits. If there are no earnings and profits, dividends cannot be paid. Generally, there is no right to have a dividend declared, and the board of directors can decide whether or not to declare a dividend. Certain classes of preferred stock may limit this discretion of the board.

Dividend Cover:

The number of times that a company's annual dividend is covered by its annual earnings, that is, its profit divided by its dividend.


An independent unit whithin a company.

Division of Labour:

The breaking up of a production process and its distribution among a number of workers so that it is carried out in the most efficient way.


Department of Motor Vehicles (U.S.).

Documentary Collection:

A payment mechanism in which a seller uses a bank as the "agent" in collecting payment from a buyer located overseas.

Documentary Credit:

A method of financing trade in which the documents proving that a sale has been made are used as collateral for a loan.

Dollar Premium:

See Investment Currency Premium.

Domain Name:

The text name corresponding to the numeric IP address of a computer on the Internet (i.e., www.webtrends.com).

Domain Name Lookup:

The process of converting a numeric IP address into a text name (for example, is converted www.webtrends.com).


The deemed place where an individual has his permanent home and the means by which that person is connected to a specific legal system encompassing marriage, divorce, succession of estate, and taxation. Or the place to which that individual intends to return, or in some cases the country of origin. In other jurisdictions the place where an individual has a long established residence or in relation to a company, where it is incorporated. Each person or company can have only one domicile (so it is not the same as residence or nationality). Many high-tax jurisdictions make themselves quite difficult to eliminate as domiciles for those wishing to escape their grasp for taxation or other reasons.


A once-popular but now little used method of selling in which a salesman goes from one house to the next, attempting to persuade the occupier to purchase goods or services. Traditionally used for selling insurance and encyclopaedias.

Dormant Company:

A company that is not currently trading. It has a registered name, directors, articles of association, and so on. But it has no turnover.

Double-entry Book-keeping:

A fundamental principle of accounting whereby every entry into a company's balance sheet has an equal and opposite counterpart: Every asset has a balancing liability. A new factory is recorded as an asset; the money used to buy it is recorded as a liability.

Double Exit:

Use of two passports for the purpose of confusion or convenience.

Double-taxation Agreement:

An agreement between two countries designed to ensure that companies and individuals are not taxed on the same bit of income in both jurisdictions. The agreements lay out rules as to who has the right to tax which bit of profit, dividend, income or whatever.

Double Taxation Agreement (or Double Tax Treaty):

Agreement between two countries intended to relieve persons who would otherwise be subject to tax in both countries from being taxed twice in respect of the same transactions or events.


To forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just so long as it is needed.

Double Time:

Any period of time during which an employee is paid double the normal rate – for example, for working on a Sunday or a public holiday.

Double Trust:

A foreign trust known as Trust No. 1 where the assets are held by a custodian outside the United States and Canada and whose creator is an offshore corporation, generally a Panamanian corporation, with Trust No. 2 acting as creator and designated as sole beneficiary of Trust No. 2, a second trust, usually a United Kingdom trust. A United States Internal Revenue Service ruling of June, 1981 challenges the use of double trusts in which there is a foreign trust with income-producing property that has the trustee of Trust No. 1 as the same person owning the property and then putting the property in Trust No. 2, with itself, the trustee. In addition, a double trust ruling of 1980 (Revenue Ruling 80-74) also flashes a warning signal for double trusts in which the creator of a foreign trust names the taxpayer as trustee in the same country. If two trusts should be used as a result of the Internal Revenue Service positions taken above, it is extremely important to make certain that a United States trust is not used as Trust No. 2, and there are no United States beneficiaries, trustees or creators. Since all double trusts are carefully scrutinized by the United States Internal Revenue Service, it is necessary to make certain they are not sham operations. Double trusts have been used in the past mainly to make use of any benefits offered in a United States Income Tax Convention but they should be avoided when United States beneficiaries are involved.

Dow Jones:

The best-known index of movements in the price of US stocks and shares. The main index, the Dow Jones Industrial Average, was founded in October 1896 and measures the price movements of leading shares quoted on the New York Stock Exchange.


To transmit electronically stored information from one computer to another, or from a hard disk to a floppy disk.


A marketing term based on a theoretical division of markets into a top, a middle and a bottom. A product aimed to appeal to the bottom end of the market is said to be downmarket. The division of markets can be based on social class, wealth or lifestyle. Contrast with upmarket.


A corporate strategy aimed at producing the same amount of output from a smaller quantity of resources (of land, labour or capital). The resource that gets hit first in downsizing is usually labour. In the early 1990s downsizing became almost synonymous with redundancy.


An expression used (particular in the oil industry) to indicate an activity that is close to the final consumer. A filling station is much more downstream than an oil rig, for example.


The amount ot time that is lost during a production process in maintaining the machinery or in waiting for essential inputs. In most companies the amount of downtime has been falling sharply in recent years.


A signed, written order by which one party (the drawer) instructs another party (the drawee) to pay a specified sum to a third party (the payee), at sight or at a specific date.

Dual Pricing:

Asking different prices for the same goods and services in different markets. Dual pricing may give rise to accusations of dumping.

Due Date:

The date on which an obligation is due to be met; for example, the payment of interest or principal on a loan.

Due Diligence:

A thorough search of a company's businesses carried out by the manager of a new issue of the company's securities or by representatives of another company that is interested in taking it over. If the searchers find that things are not as they had been led to belive, they have gournds for withdrawing from the deal.

Dummy Corporation:

A corporation set up to avoid usury tax laws or to keep property out of the hands of creditors and seeming to act independently but in reality controlled by a third party.


A tax imposed on goods or services as they are traded (for example, import duties) or as they are consumed (for example, the duty on tobacco or alcohol.




: A commonly used expression in America for a company's net profit.

Earnings per Share:

The net profit (or earnings) of a company divided by the number of ordinary shares in issue. Earnings by the number of ordinary shares in issue. Earnings per share (EPS) is a useful way to measure a company's performance over time, and its performance relative to other companies.


A method of buying a company which relates the price to its future earnings. This is popular when the company is being sold by its present managers to an outsider who is keen to ensure not only that the managers stay on, but also that they are motivated to maximise the company's earnings in the future.


Short for the European Bank for Reconstruction and Development, a London-based international financial institution set up to help channel funds from the West to Russia and other countries of eastern Europe as they emerged from decades of communism.


Almost all phone calls in the world are routinely scanned for "suspicious words" by various governmental agencies' computers. You have probably heard of Echelon, the international surveillance system. And there are other, and more to come! The European Union is planning its own EU Phone, Fax & Internet Surveillance System. In Germany, all international calls are already automatically scanned by the Bundes-Nachrichten-Dienst. Even Austria is following suit.


Short for electronic commerce, the transacting of business electronically, largely via the internet.

Economic Life:

The length of time during which a machine or a piece of equipment will produce more revenue than it costs to maintain it.


How the world makes a living or, more specifically, how resources (land, labour and capital) are used to produce goods and services to meet human wants. When one early economist, Thomas Malthus, believed that resources were so scarce that the world was permanently on the edge of famine, economics came to be known as the dismal science.

Economies of Scale:

Factors which cause the average cost of producing something to drop as output is increased, or the savings that can be made by manufacturing goods or supplying services in large quantities. This is the principle behind all mass production. Whereas a company's direct costs increase in direct proportion to the volume of its output, its overheads do not. Whatever number of widgets a company produces, it needs only one headquarters, one board, and one CEO.

Economies of Scope:

The savings that can be made by producing a broad range of goods or services. A bank, for instance, may find that it costs only a little bit more for it to sell insurance products at the same time and the same place as it sells loans.


Economic and Social Council.


Economic Community of West African States. Member states: Nigeria, Niger, Benin, Togo, Ghana, Burkina Faso, Cote d'Ivoire, Mali, Liberia, Sierra Leone, Guinea, Guinea Bissau, Gambia, Senegal, Mauritania and Cape Verde.


European Currency Unit.


Electronic Debit Card.


European Development Fund.

Edge Act Corporation:

A United States corporation organized for the purpose of engaging in international or foreign banking or other financial operations. It may be engaged in banking or other financial operations. It may be engaged in banking or financial operations in a dependency or similar possession of the United States, either directly or through an agency, ownership, or control of local institutions in foreign countries, or in such dependencies or in insular possessions.


European Economic Community.


The relationship between the input into a machine and the output from the machine. The term is extended to refer to human machines: some workers are more efficient than others.


European Free Trade Association.


Short for extraordinary general meeting, a special meeting of company's shareholders called to consider matters that cannot wait until the company's next annual general meeting.


U.S. Federal Employer Identification Number.


The amount by which one thing changes for each unit change in something else. The elasticity of supply and demand are the amounts by which the production or consumption of goods or services change for each unit change in price.


Short for electronic mail, the production and distribution of messages electronically; literally, a form of paperless post. There are semi-public ways of sending e-mail (via the internet) and there are private networks for sending e-mails, between employees of the same firm, for example. Such a private network is referred to as an intranet.


A ban on transferring something from one party to another. It may be goods, such as a trade embargo preventing the export of arms to a particular country. Or it may be information, for example: "This news is embargoed until midday tomorrow".

Emerging Economy:

A country that is on the way to becoming a developed economy in terms of its GDP per head, and its financial and industrial structure.


Short for European Monetary Institute, the Frankfurt-based central bank established as part of EMU.


Emigration to a tax haven or to a country offering special retirement incentives may serve to break totally or in part the link between a taxpayer and the high tax jurisdiction from which he is emigrating. Normally, it is the change in the place of residence which is material; however, in other cases a change in domicile or even citizenship (in the case of the United States) may be necessary. Anti-avoidance provisions or exchange controls may delay or render extremely difficult the coming into effect of the fiscal advantages of the act of emigration.


Someone who works for an organization doing a defined job for an agreed amount of compensation.


Someone who employs others to perform stipulated tasks in return for monetary rewards.

Employment Agency:

An agency that tries to match the needs of employers with those of employees. Many agencies specialize in finding workers with particular sorts of skill, such as computer, secretarial or accounting.


The concept of giving employees the freedom to take as many decisions for themselves as possible.


Europan Monetary Unit.


Short for Economic and Monetary Union, a series of steps whereby the members of the European Union bring their monetary and exchange-rate policies into line. Members: Germany, France, Spain, Portugal, Belgium, The Netherlands, Luxembourg, Italy, Greece, Finland, Austria and Ireland.


A signature on the back of a cheque or other financial instrument by the payee. It effectively transfers the ownership of the instrument from the signatory to the bearer. In advertising, an endorsement is the recommendation of a product by a well-known person.

End User:

The ultimative user of a product who is not necessarily the purchaser of it; for example the driver of a company car.


A warehouse for the storage of imports or goods in transit from which they may be reexported or shipped to a final destination. An especially important concept in Hong Kong where only merchandising and manufacturing profits realized within the Colony are subject to income tax.


A person who recognizes a market opportunity, raises the resources necessary to exploit it, and personally bears some of the risk. The term was used by a French economist, Jean-Baptiste Say, to describe someone who "shifts economic resources out of an area of lower and into an area of higher productivity and greater yield".

Environmental Audit:

An audit of a company's impact on the environment. The International Chamber of Commerce's definition is: "A management tool comprising a systematic, documented, periodic and objective evaluation of how well (the company's) environmental organization, management and equipment are performing.

Equal Opportunity:

The idea that all men and women should have an equal opportunity to do any particular job. Much progress has been made in ensuring that this is the case, but there are still exceptions, as is apparent from the small number of women in senior positions in big corporations.


The risk capital supplied by shareholders to a business and the balancing item in a company's balance sheet – the amount by which its assets exceeds its other liabilities (to bankers, suppliers, and so on). This is the company's surplus funds, which belong equitably to its shareholders.

Equity Options:

A class of options giving the purchaser the right but not the obligation to buy or sell an individual share, a basket of shares or an equity index at a predetermined price, on or before a fixed date.

Equity Swaps:

A transaction that allows an investor to exchange the rate of return (or a component thereof) on an equity investment (an individual share, a basket or index) for the rate of return on another non-equity or equity investment.


The study of the way in which people work, and of the ways in which this (and the machines that they use) can be improved in order to make them more more efficient.


European Space Agency.


When a contract or an asset such as money is placed with a third party until certain conditions are met, it is said to be held in escrow. Parties that are in dispute over the ownership of an sset may agree to place the asset in escrow until an arbitrator has had time to decide who is the rightful owner.


See Anstalt.


An approximate price given by somebody for something that they with to sell to a potential customer.

Ethical Investment:

The idea, promoted particularly by certain funds in the United States, of investing only in companies that meets specific ethical criteria. Companies that do not do business with fascist regimes, for example, or do not massively pollute the environment.


European Union. Member states: Belgium, Eire, Denmark, France, Italy, Luxembourg, The Netherlands, Great Britain, Germany, Greece, Spain, Portugal, Sweden, Finland, Austria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.


European Currency Union. A single common unit of currency (€, EUR, Euro) designated and accepted as legal tender as of January 1, 2002, by most of the member countries of the European Union, whether or not they qualify to participate in the European Monetary Union. Members: Germany, France, Spain, Portugal, Belgium, The Netherlands, Luxembourg, Italy, Greece, Finland, Austria and Ireland. However, each member country's own currency also will be accepted as legal tender until year 2002, at which time the only valid legal tender will be the euro. The euro will be the official exchange for cross-border transactions as well as for domestic purposes as will have a fixed value at the outset yet to be set but expected to be in the range of approximately one euro equals United States $.


A bond issued in a currency other than that of the country or market in which it is issued. Interest is paid without the deduction of tax. Eurobonds are long-term loans issued in terms of the United States dollars or other currencies or in terms of composite units of account. They may take the form of loans, debentures or convertible debentures and are issued at a fixed rate of interest. Eurobonds are normally issued in countries where interest payments are not subject to withholding tax. Major issues are frequently handled by international underwriting syndicates.


Eurocurrencies are currencies held outside the country of origin by non-residents of that country and made available to the Eurocurrency market for lending. The market originally developed in Eurodollars, but other currencies, e.g. Deutschmarks, Swiss francs and Yen, now form a major part of the market. The market is not subject to exchange controls or other restrictions, although investors and borrowers may be so subject in their own countries.


Dollars originally deposited in United States banks that are acquired by persons residing outside the United States and held abroad, mainly in Europe, but also frequently in other areas. Depositories of Eurodollars include foreign branches of United States banks, where a large percentage is deposited. Owners of Eurodollars may be Americans residing abroad, who may have accounts in banks outside the United States. Of approximately $700 billion of Eurodollars now in existence, approximately $400 billion is held by United States persons, particularly foreign subsidiaries and branches of United States parent corporations. Although London remains the Eurodollar center, such other cities as Paris, Zurich, Amsterdam, Nassau in the Bahamas, Hong Kong and Singapore have increased in importance as depositories. Eurodollars are used by foreign banks as a method of financing loans to other local or foreign banks or to commercial borrowers. This type of lending has played a significant part in the rapidly expanding volume of foreign trade, which is now approximately $1.6 trillion annually. The bank that lends the Eurodollars, or Eurocurrency if it is in German Deutschemarks, Swiss francs or another foreign currency, charges an interest rate ranging from ¾% to 2% over the rate it is paying the Eurodollar depositor. There is approximately $1.2 trillion of Eurocurrencies, including the $900 billion of Eurodollars. The name Asiadollars has been coined for the dollars deposited in banks in Asia, particularly in Singapore. Afrodollars are dollar deposits in various foreign banks in Africa.


A market in financial instruments that are denominated in a currency other than that of the market in which they are traded; for example, a Zurich-based market in dollar-denominated corporate bonds.

European Commission:

The executive organ of the European Union, run by 20 commissioners (two each from France, Germany, Italy, Spain and the UK, and one from each of the other ten member states). The commission drafts legislation in the form either of regulations of directives. Regulations are passed through the European Parliament and apply in all member states. Directives leave the means of achieving the desired result up to individual, member states.

European Union (EU):

The community of powerful European countries set up in 1957 by the Treaty of Rome and fired by the desire of its founders to avoid yet another pan-European war. European Union member countries: Spain, Italy, Ireland, Netherlands, Luxembourg, United Kingdom, Austria, Germany, Finland, Portugal, France, Sweden, Belgium, Denmark and Greece. The members of the EU are gradually bringing their economic and monetary affairs closer and closer together. They were joined by Denmark, Ireland and the UK in 1973, Greece in 1981, Portugal and Spain in 1989, and Austria, Finland and Sweden in 1995. As of May 01, 2004 also: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Applicant countries: Bulgaria, Romania and Turkey.


Effective January 01, 2002, European Union (EU) member states: Belgium, Eire, Denmark, France, Italy, Luxembourg, The Netherlands, Great Britain, Germany, Greece, Spain, Portugal, Sweden, Finland and Austria - except: Great Britain, Sweden and Denmark.


Latin for 'without', the opposite of Cum. Used to indicate that the buyer is not entitled to participate in whatever forthcoming event is specified, for example, ex cap, ex dividend, ex rights.

Exempted Company:

Companies that formally declare to the Government of a respective country that they will not trade within that country for any reason may obtain a guarantee from the Government that they will not be subject to any income, capital or capital gains, estate, inheritance or similar taxes for designated periods up to as long as 30 years.


The removal of one's legal residence or citizenship from one country to another. Expatriates from Third World countries enter OECD countries to search for better income opportunities than they can pursue at home. Expatriates from OECD countries search for better capital preservation opportunities than they can pursue at home.

Exchange Control:

Government-imposed controls that restrict the amount of currency (domestic and foreign) that can be brought in or out of a country by individuals and corporations.

In some jurisdictions (e.g. Australia, Japan and the United Kingdom) the regulations may render a contract void unless prior consent is obtained.

Exchange Rate:

The amount of money denominated in one currency that can be obtained for a unit of another. Most countries express their currency first and foremost in terms of the US dollar.


A selective tax imposed on the consumption of goods and services.


An expression used to refer to a share price that does not incorporate a dividend payment that has been declared by the company but not yet paid. The dividend in question goes to a previous owner of the share.


Someone who has the power to decide that tasks should be executed. The word usually refers to managers at senior levels.

Executive Director:

Strictly speaking, a company executive who is also a director, that is, who serves on the company board. The term director is, however, sometimes used loosely as a title for someone not on the board. In this case an executive director is just a senior executive.

Exempt Company:

A company exempted from tax or from compliance with specified regulations of the country in which it is established.

Exempt Gilt:

Security issued by the British Government with the condition that they will be free of United Kingdom tax when beneficially owned by non-residents.

Exempt Trust:

A trust established in a country where the Government issues a guarantee that the trust income and property will not be taxed for a specified number of years no matter what laws are subsequently passed relating to income, inheritance, estate duty, or capital gains taxes.

Exempt Gilt:

Security issued by the British Government with the condition that they will be free of United Kingdom tax when beneficially owned by non-residents.


Recognition of a country's consul by a foreign government.


Making use of a right given under the terms of a contract. For instance, the option to purchase as share at a certain price and within a certain time; or the right to take up a rights issue.


An annotation added to a price to indicate the point at which the price applies, in this case when it leaves the factory. In other words, the cost of delivery is extra. Similarly, a price could be ex-warehouse or ex-customs.

Ex Gratia:

An extra payment made to an employee "out of thanks". A feature of an ex-gratia payment is that the payer is under no contractual obligation to make it.

Exit Route:

The way in which an investor hopes to realize a capital gain from an investment. With investment in a business, this usually involves floating the business on a stockmarket and selling shares to the general public. In a more general sense, an exit route can be any strategy for withdrawing from a particular course of action.

Ex Officio:

A Latin expression for something that arises "out of the office" – belonging to somebody because of the office that they hold rather than because of the person that they are. For example, many of the duties of the chairman of a company (such as making the casting vote at a board meeting) arise from the fact that he or she occupies the office of chairman, not because they have been chosen as individuals to carry out that duty.


A person living and working in a foreign country. The tax position of expatriates can become complicated because they fall under at least two jurisdictions. Expatriates often enjoy a lifestyle above what they might expect at home because they get perks to compensate for the "hardship" of their posting.


A person living and working in a foreign country. The tax position of expatriates can become complicated because they fall under at least two juristdictions. Expatriates often enjoy a lifestyle above what they might expect at home because they get perks to compensate for the "hardship" of their posting.

Expense Account:

An allowance given to an executive for the purposes of entertaining and/or travelling in pursuit of business.


Goods or services that are sold to someone or some organization outside the country in which they are produced.

Export Credit:

A loan given to an exporter in which the goods being exported provide security for the loan. An export credit is designed to bridge the gap between the time when an exporter receives an order and the time when it receives payment. With large capital goods this can be many months, if not years.

Export Credit Agency:

An organization set up to administer export credit guarentees. Such agencies also sometimes lend money directly to foreign buyers to enable them to buy goods from the country of the agency. These loans are frequently granted at favourable rates of interest, involving an element of subsidy to the overseas buyer.

Export Credit Guarantee:

A scheme set up (usually by a government or government agency) to help its countries' exporters by giving gurantees to bankers that their loans to those exporters will be repaid.


An insurance policy taken out to reduce the risk of loss of exported goods while they are in transit.


The extent to which a creditor is vulnerable to a particular debtor. For example, a bank is exposed to the textiles industry if it has lent considerably more to that industry than to others.


A note added to the quotation of a share price to indicate that anybody buying the share at that price does not get the benefit of a declared (but not yet issued) rights issued.

External Debt:

The financial obligations of a company or a country to overseas (that is, non-domestic) creditors.

External Funds:

The funds available to an organization that come from outside the organization, usually in the form of bank loans, trade credit, bonds or shares.

Extraordinary Item:

An item in a company's accounts which is out of the ordinary, that is, which does not appear as a matter of course in every year's accounts. Extraordinary items need to be explained to shareholders in the company's annual report.

Extraordinary Resolution:

A resolution, or statement of intent, to do something that falls outside a company's ordinary course of business. For example, a resolution to take over another company, or to dismiss a director for fraud.


The same as ex-factory.