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corporate governance
by leon on February 28, 2008

More evidence that good governance delivers results.
Portfolios with companies that have good corporate governance deliver 18% higher average share-price returns to investors than those without, according to a new survey from the Association of British Insurers. According to the survey, investing £100 ($US199) in the portfolio of well-governed companies yielded roughly £120 ($US238) by the end of 2007. Investing £100 in the portfolio of poorly-governed companies yields just £102 ($US203).
The survey also found that when companies breached governance best practice, they reduced the industry-adjusted return on assets by 1 percentage point a year. And if they did it consistently, they would reduce it by 3 to 5 per cent.
One of the interesting findings relates to the number of non-executive directors. Having them on board improved performance but having too many decreased profitability.
Permalink: Governance and performance
Trackback: http://publish.creative-weblogging.com/publish/mt-tb.pl/115284
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Portfolios with companies that have good corporate governance deliver 18% higher average share-price returns to investors than those without, according to a new survey .
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