Help
CEOExpress Home | News Center | Contact Us
  McKinsey Quarterly

 
Industries
Automotive
Energy, Resources, Materials
Financial Services
Food & Agriculture
Health Care
High Tech
Media & Entertainment
Nonprofit
Public Sector
Retail
Telecommunications
Transportation
Function
Corporate Finance
Economic Studies
Governance
Information Technology
Marketing
Operations
Organization
Strategy
Search Articles:

All of these words Any of these words
Summary
Please note: The McKinsey Quarterly has agreed to a special arrangement for CEOExpress members that allows member access to their articles. Articles must be clicked on directly through the links below to gain access to this group of articles.
A premium for good governance
Institutional investors in companies based in emerging markets claim to be willing to pay as much as 30 percent more for shares in companies that are well-governed. Do these investors mean what they say? The authors examined 188 companies from India, Korea, Malaysia, Mexico, Taiwan, and Turkey to test the link between market valuation and corporate-governance practices. They found that companies with better corporate governance had higher price-to-book ratios, indicating that investors do indeed reward good governance, and with quite a large premium: companies can expect a 10 to 12 percent boost to their market valuation by going from worst to best on any single element of governance.

The take-away: Companies in emerging markets often assert that Western standards of corporate governance don’t apply to them. But our results show that investors the world over are looking for the same basic standards of good governance—and will pay a premium for shares in companies that meet them.
  


Articles provided by The McKinsey Quarterly
© 1992-2003 McKinsey & Company, Inc

 

Copyright ©1999-2024 CEOExpress Company LLC.