Corporate Governance by the Numbers: It Doesn’t Work [Archive.org URL]

Formulas used by consultants and ratings services that assign single numbers or grades to a company’s corporate governance practices don’t work, suggest three Wharton professors in a new paper entitled, “Does Corporate Governance Really Matter?” Yes, it matters, the authors say, but what also matters is how performance is measured. Companies and their situations are too diverse to be shoehorned into simple scorecards. As one researcher notes, “The recipe book is big, and there’s a different recipe for each company.”

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