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
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
Related Stories
-
Toshiba apologises for scandal to Abe
Japanese governance under scrutiny as Toshiba’s accounting shock rumbles on.
-
Questions non-execs should ask before joining the board
Before you accept the nomination, conduct an informal audit to ensure you understand the board dynamics, your responsibilities and how you can add value.
-
Philippines faces corporate governance ‘obstacles’
Companies in the Philippines are still coming to terms with the country's new corporate governance code.
