Corporate Governance Ratings and Firm Performance

Abstract

"We examine the corporate governance ratings provided by three premier US rating agencies and find that summary scores are generally poor predictors of primary and secondary measures of future firm performance. However, some component sub-ratings that focus on the eight key dimensions of dynamic governance structures provide more positive and reliable evidence of their information content in predicting the multiple dimensions of firm performance. These results reflect the recent observations by academic researchers and money managers that it is extremely difficult to distill all of the complex governance mechanisms into a single integrated, yet informative overall score." Copyright (c) 2009 Financial Management Association International..

Does Corporate Governance Matter in the Contractual Form of Fund Management Companies in China?

“…However, there is little empirical research on the role of corporate governance quality measured by those governance ratings in assessing fund performance (Chou et al 2007;Ertugrul and Hegde 2009;Wellman and Zhou 2007). However, there is little empirical research on the role of corporate governance quality measured by those governance ratings in assessing fund performance (Chou et al 2007;Ertugrul and Hegde 2009;Wellman and Zhou 2007).…”

A Study on the Relationship between Corporate Governance Ratings and Company Value: Empirical Evidence for S&P 100 Companies

“…Based on the Corporate Governance Quotient index (CGQ) reported by the ISS, Epps and Cereola (2008) identified the lack of a significant relationship between the corporate governance rating and operational performance represented by the rate of return on assets and the return on equity ratio. Ertugrul and Hegde (2009) have established that the ratings developed by TCL (The Corporate Library) and the ISS are negatively associated with future operating performance, while the GMI ratings (Governance Metrics International) are positively correlated. Daines et al (2010), using the CGQ (RiskMetrics/ISS), GMI, and TCL indices, have identified a lack of predictive skills regarding future performance.…”

The effects of social ratings on firm value

“…On the related f eld of corporate governance,Ertugrul and Hegde (2009) state that overall ratings have poor predictive power, while eight key sub-components have signif cant information content.…”