Standards of corporate governance are currently measured and reported in a way that does not correlate with shareholder returns, the key measure of corporate success.
Corporate governance is an increasingly contentious and sensitive topic. The central tenet is that there is no correlation between what we currently measure as “good corporate governance” and total shareholder returns. Most of the commentators and agitators still look to compliance with quantitative measures and fail to consider the most important drivers of good governance which we identify as:
- The competence of the individual directors
- Their relevance to the particular company/board
- Their ability to work as a team
With our data analytics partner, BJSS, we calculated the total shareholder return (TSR) of the companies listed in the IoD survey over three periods.