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A new report from IFC and the World Bank finds that Corporate Governance Indices (CGI) can raise a country’s overall corporate governance standards and can offer companies possible financial and investment benefits from corporate governance improvements.
Raising the Bar on Corporate Governance: A Study of Eight Stock Exchange Indices provides a comprehensive analysis of these indices, which could help enhance legal and regulatory frameworks by extending governance criteria to develop objectives and measurable benchmarks.
Many countries are making reforms to corporate governance a priority as a way to improve business performance and help companies attract investment and become sustainable. As a result, stock exchanges in these countries are looking for ways to promote better corporate governance practices in companies.
The study also shows that CGIs present companies with an opportunity to differentiate themselves in the market and, ultimately, offer companies an incentive to adopt better governance practices.
The following are six key findings of the study:
As the process for vetting and evaluating companies for inclusion in the indices continues to evolve, access to underlying methodologies, disclosure of the ratings and self-assessments of individual companies, and of overall monitoring processes and procedures can still be enhanced.
For more information visit: www.ifc.org/corporategovernance.