Home Social Investment Good governance gives 18% better returns over 5 years

Good governance gives 18% better returns over 5 years

Tuesday, 26 February 2008

Companies with the best corporate governance records have produced returns 18% higher over a sixty-month sample period than those with the poorest governance, according to a report by the UK Association of British Insurers. ABI report shows clear link between corporate governance and returns. The study of 654 UK FTSE All-Share companies from 2003 to 2007 using governance data from the ABI’s Institutional Voting and Information Service (IVIS), also revealed that breaches of governance best practice (known as a red top warning in the ABI’s guidance) reduces a company’s industry-adjusted return on assets by an average of 1 % per annum. Read the full article by Responsible Investor.