GLOBAL - New corporate governance ratings have been added to the FTSE ISS Corporate Governance Index (CGI) Series, created to assist investment managers in assessing and managing portfolio risk.
The index series, formed by FTSE Group and corporate governance specialists Institutional Shareholder Services (ISS) contains six regional indexes. The ratings, which cover more than 2200 companies from 24 countries are based on: equity structure and anti-takeover devices, structure and independence of the board, independence and integrity of the audit process, executive and non-executive director stock ownership and compensation systems for executive and non-executive directors.
In a joint statement, FTSE and ISS said analysis of the index and ratings performance revealed strong country and size biases to good corporate governance practices amongst companies, which are less evident across industry sectors.
“The ratings allow investors to understand corporate governance risk on their individual portfolio companies, while the indexes allow investors to view the corporate governance impact on overall performance,” the firms said in a joint statement.
Mark Makepeace, chief executive of FTSE and John Connolly, chief executive of ISS, added: “It’s now understood that corporate governance failure leads to loss of shareholder value, but until now, quantifying the risk represented by corporate governance practice has posed a challenge for investors.
“The FTSE ISS CGI series and ratings provide a means to integrate that information into global portfolios.”
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