What are the benefits of good corporate governance?
Well-governed companies enjoy greater access to capital and lower capital costs, and they provide higher long-term return on investment for their shareholders. A March 2009 study by Governance Metrics International (GMI) concluded that well-governed companies are faring better in the current economic downturn. Out of a sample of 4,200 companies rated by GMI, only 90 companies exhibited consistently high corporate governance standards over 12 quarterly rating cycles, and these 90 companies outperformed their market capitalization peers by 23 percent in shareholder returns! According to two recent studies, poorly-governed companies in Brazil could increase their market capitalization by 85 – 100 percent with a shift to good governance. Another study suggests that well-governed firms in Korea traded 160 percent higher than poorly governed firms. For more on company-specific benefits, as well as “how to” advice on implementing good corporate governance practices, read Practical Guide to Co