GLOBAL - Some 90% of investors favour a single global accounting standard, new research from management consultancy McKinsey & Company shows.
McKinsey’s latest survey of more than 200 institutional investors in 31 countries revealed that corporate governance criteria was increasingly being used to drive major investment decisions.
Over 60% of investors would exclude individual companies on the back of corporate governance considerations with nearly 33% saying they would avoid entire countries on that basis.
More robust accounting standards were a top priority in light of recent US scandals, although investors were split on the preferred standard. McKinsey director Paul Coombes said: “Investors are saying loudly and clearly that they want to have more faith in the integrity of corporate conduct and reporting.
“Factors such as greater financial disclosure, strengthened shareholder rights and more board independence remain critical. Reform priorities vary by region and country. However the overall message is clear – investors want financial information they can trust, the ability to hold the board and management to account, and strong checks on abuses.”
Most investors were also prepared to pay more for high governance standards. Premiums averaged 12-14% in North America and Western Europe; 20-25% in Asia and Latin America; and over 30% in Eastern Europe and Africa.
After strengthening corporate transparency (52%), investors believed companies should create more independent boards (44%) and achieve greater boardroom effectiveness (38%) through better director selection, better board evaluations, and greater time commitment from directors.
Specific policy priorities include strengthening shareholder rights (33%), improving accounting standards (32%), promoting board independence (31%) and tighter enforcement of existing regulations (27%).
Coombes added: “Going forward, policymakers need to focus on consolidating the framework for good governance. ... Capital market regulators and standard-setters should strengthen market regulation and infrastructure and accounting standards, while in emerging markets, politicians need to ensure property rights are enforceable and maintain downward pressure on corruption.”
By Madhu Kalia
Jonathan Stapleton asks whether newly-accredited professional trustees should be a statutory fixture on pension scheme boards.
Savers are being warned by the Insolvency Service to guard their pension pots from investment scammers and negligent trustees as it winds up 24 companies.
Respondents say they should only be required in certain situations as the system is not broken.