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.