21 June, 2021

ISS governance rating downgrade ‘can hit share performance’

Research shows the downgrading of a firm’s ISS governance rating can result in a 1% slide in share performance—and the fall in value is not recovered.

Image: Black Salmon/Shutterstock

Proxy advisory firm Institutional Shareholder Services (ISS) is well-known for the impact of its controversial voting advice. But new research has revealed the power of its corporate governance rankings, too. Academics at King’s Business School found that the downgrading of a company's ISS corporate governance rating can result in a 1% slide in share performance during the course of a three-day announcement window. They also concluded that the fall in value is not recovered. The research, conducted by Paul Guest and Marco Nerino, looked at the stock performance of 3,616 US companies whose governance rating was downgraded by ISS. ISS o

Want to read more? Register with a few details to continue reading this article or log in.

For thoughtful journalism, expert insights on corporate governance and an extensive library of reports, guides and tools to help boards and directors navigate the complexities of their roles, subscribe to Board Agenda

corporate governance, ISS, Proxy advisers, ratings, SEC, shares