NEW YORK — GovernanceMetrics International Inc. suggests a close relationship between top corporate governance and shareholder return in its new ratings.
New York-based GMI gave its highest corporate governance rating, a 10, to 34 of the 3,220 global companies it evaluates. Of the companies receiving the top score, 27 were American; three, Canadian; three, British: and one, Australian.
The U.S. companies are: 3M Co., Air Products and Chemicals Inc., CIT Group Inc., Colgate-Palmolive Co, Cooper Industries Ltd., Dow Chemical Co., Eastman Kodak Co., Entergy Corp., General Electric Co, General Motors Corp., Gillette Co., Great Lakes Chemical Corp., Johnson Controls Inc., Lockheed Martin Corp., Mattel Inc., Occidental Petroleum Corp., Peoples Energy Corp., PepsiCo Inc., PG&E Corp., Praxair Inc., Procter & Gamble Co., Public Service Enterprise Group Inc., Regency Centers Corp., Rohm & Haas Co., SLM Corp., United Technologies Corp., and Wisconsin Energy Corp.
The top-rated companies in Canada are BCE Inc., Nexen Inc. and TransCanada Corp.; in the United Kingdom, BP PLC, Smith & Nephew PLC and Vodafone Group PLC; and in Australia, Westpac Banking Corp.
An equal-weighted portfolio of these companies outperformed the Standard & Poor's 500 index — as measured by total returns in percentage points — for each of the one-, three- and five-year periods (ended Feb. 28) by 11.13, 9.9 and 15.93, respectively, according to GMI.
Gavin Anderson, president and chief executive officer, said, although the comparison isn't equivalent because the S&P 500 is capitalization weighted, recent studies by others suggest the same positive correlation.
Of the GMI findings, he said, "I think what it says is that across a portfolio of companies over several time periods this (result) does suggest a correlation of good corporate governance and market performance. As a generalization, it suggests better governed companies are going to outperform."