Twenty-six companies — 20 U.S., five Canadian, and one Australian — received a top rating for corporate governance, based on Governance Metrics International's ratings on 2,588 global companies released today. Included were U.S. companies 3M Co., Coca-Cola Co., Colgate-Palmolive Co., Dow Chemical Co., Eastman Kodak Co., General Motors Corp., Gillette Co., Lockheed Martin Corp., PepsiCo Inc. and Target Corp. Also listed were BCE Inc. in Canada and Westpac Banking Corp. in Australia.
A portfolio with one share from each of the 26 companies would have outperformed the S&P 500 index for the last one-, three- and five-year periods ended Aug. 31, which "suggests a correlation between corporate governance practices and portfolio returns when measured across a number of variables and across a multiyear period," Gavin Anderson, GMI's CEO, said in a statement.
U.S. companies had the highest overall average corporate governance rating, at 7.23, followed by Canadian companies, at 7.19; U.K., 7.12; and Australian, 6.73. Greek companies had the lowest overall average rating, at 2.93, followed by Japan, at 3.57; Belgium, 4.52; Portugal, 4.55; and Denmark, 4.6.
The GMI ratings were from 1 to 10, with 10 being the highest rating. GMI rates companies semiannually on six broad categories of corporate governance: board accountability; financial disclosure and internal controls; executive compensation; shareholder rights; ownership makeup and takeover provisions; and corporate behavior and social responsibility.