The Great Governance Debate: Towards a Good Governance Index for Listed Companies

“The Great Governance Debate: Towards a good governance index for listed companies,” launched at the Institute of Directors, sets out a new framework for assessing corporate governance, moving away from a focus on compliance and towards a more complex measurement which combines public perceptions with a range of objective factors. Ken Olisa, chairman of the advisory panel for the report, warned that the current system doesn’t fully address what corporate governance is truly about. “No one factor dictates whether a company is well run,” Olisa said. “It is simply not correct for a company to say that because they have ticked certain boxes, they show good governance.

“Now is the time for some bold thinking on how we define and measure governance, including the recognition that it is essentially an organic process involving the interaction of groups of people.”

The new report is the first stage in a move towards creating a comprehensive Good Governance Index which ranks individual companies on their corporate governance, taking into account factors beyond just compliance and looking at a company’s wider corporate behaviour and culture. [Hat tip to FinanceProfessor]

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