Vetting

Definition of 'Vetting'


A thorough and diligent review of a prospective person or project prior to a hiring or investment decision. Vetting most often refers to an individual or group, such as how a board of directors will "vet out" a prospective CEO or other top management position. Vetting of potential suppliers of a contract or business service is a common practice for the managers of a publicly-traded company, where past business results, costs and personal relationships all figure into the final decision.

Investopedia explains 'Vetting'


Today's economies are so global that vetting takes on an increasingly important role. Potential employees or business partners may be located on the opposite side of the globe, with teleconferencing and email replacing face-to-face contact and meetings. Vetting must often be done via the internet or by outsourcing parts of the process.

For investors, vetting often takes the more common name of "due diligence", the rigorous process of researching a potential investment prior to purchase or sale.


Filed Under:

comments powered by Disqus
Hot Definitions
  1. Treasury Inflation Protected Securities - TIPS

    A treasury security that is indexed to inflation in order to protect investors from the negative effects of inflation. TIPS are considered an extremely low-risk investment since they are backed by the U.S. government and since their par value rises with inflation, as measured by the Consumer Price Index, while their interest rate remains fixed.
  2. Gilt-Edged Switching

    The selling and repurchasing of certain high-grade stocks or bonds to capture profits. Gilt-edged switching involves gilt-edged security, which can be high-grade stock or bond issued by a financially stable company such as the Blue Chip companies or by certain governments.
  3. Master Limited Partnership - MLP

    A type of limited partnership that is publicly traded. There are two types of partners in this type of partnership: The limited partner is the person or group that provides the capital to the MLP and receives periodic income distributions from the MLP's cash flow, whereas the general partner is the party responsible for managing the MLP's affairs and receives compensation that is linked to the performance of the venture.
  4. Class Action

    An action where an individual represents a group in a court claim. The judgment from the suit is for all the members of the group (class).
  5. Retail Sales

    An aggregated measure of the sales of retail goods over a stated time period, typically based on a data sampling that is extrapolated to model an entire country. In the U.S., the retail sales report is a monthly economic indicator compiled and released by the Census Bureau and the Department of Commerce.
  6. Okun's Law

    The relationship between an economy's unemployment rate and its gross national product (GNP). Twentieth-century economist Arthur Okun developed this idea, which states that when unemployment falls by 1%, GNP rises by 3%. However, the law only holds true for the U.S.
Trading Center