ROCKVILLE, Md. — Most institutional investors worldwide do not have tools to assess the value of their corporate governance activities, even though they believe such efforts offer value, according to a survey by Institutional Shareholder Services Inc., Rockville.
"Metrics are commonplace in the financial industry, but when it comes to corporate governance, they have been in curiously short supply," a report on the survey findings said.
The survey found that 81% lack measurement tools, yet 67% of respondents believe "corporate governance offers value, but is hard to quantify."
"We found corporate governance has shifted from a compliance obligation to a business imperative," Stephen Deane, vice president and director of the ISS Center for Corporate Governance, who led the survey. said in an interview.
"Corporate governance is global. The way institutional investors think and act is shaping corporate governance around the world."
ISS conducted the survey because "we wanted to contribute to global understanding of how institutional investors view corporate governance," Mr. Deane said.
In virtually every market, investors "share four fundamental concerns: building better boards, aligning executive pay with shareholders' interests, improving the quality of disclosure, and enhancing bottom-line company and CEO performance," the report said.
Of the findings:
• 28% of institutional investors in the survey believe corporate governance offers their investment firms or funds a competitive advantage in equity investments;
• 37% named enhanced shareholder return as the most significant advantage of corporate governance; and
• 3% believe "corporate governance has little or no value beyond compliance."