According to a newly released survey from Institutional
Shareholder Services, nearly all investment advisors interviewed in a global
study agree that corporate governance is no longer a compliance obligation for
companies, but an imperative business responsibility.
What does this mean? From our perspective it means that
the day when the signature traits of firms of endearment will traits in
mainstream corporate communities could be not all that far in the future. The
interesting question here is what happens to a FoE’s competitive advantages
when competitors acquire many of the same competition-beating characteristics? We
will explore that question in a future post.
And what do the findings of the ISS survey mean from an investor's perspective? They mean greater transparency, for one thing. While a spate of high profile corporate scandals has made compliance a bigger issue than ever before, of the 63% of investors predicting corporate governance to increase in importance over the next three years, only 37% listed compliance as a driving factor. Enhanced investment returns (33%), client demands (32%) and risk management (21%) were seen as bigger issues than scandals.
Institutional Shareholder Services interviewed 322
investment analysts from 18 nations. Total assets managed by their firms add up
to $10.5 trillion, about one-third of the estimated total global equity assets.
The full 100-page study can be accesses here.
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