NEW YORK, Sep. 23 /CSRwire/ - GovernanceMetrics International (GMI), the corporate governance research and ratings firm, announced today new country rankings based on overall quality of corporate governance. GMI publishes research and ratings for 4,207 companies in 45 countries. Out of this global universe the highest ranked markets were Ireland, with an average overall company rating of 7.44, followed by the UK (7.36), Canada (7.35), Australia (7.32) and the US (7.18). GMI ratings are scaled from 1.0 to 10.0, with 10.0 being the highest. The new country rankings were based on GMI’s most recent company ratings, which were made available to clients yesterday.
565 of the companies covered by GMI are from emerging markets. South Africa ranked the highest among this emerging market peer group, with an average overall rating of 6.49. The average overall rating for all emerging market companies covered by GMI was 4.09.
Singapore's average rating of 5.07 ranked number one among the Asian markets covered by GMI. Within the Latin America region, Brazilian companies ranked the highest, with an average overall rating of 4.01. The lowest ranked countries worldwide included China (3.01), Mexico (2.48) and Chile (1.96).
China’s ranking was particularly striking in light of its rapid growth in recent years and is largely due to 82% of companies covered by GMI having a non-independent board, 60% having an executive chairman with none of the 40% non-executive chairmen classified as independent by GMI, and disclosure levels that are still well below standard. Other notable results included Japan, the world's second largest economy but with a low average rating of 3.32. Reasons for this include the fact that 96% of Japanese companies rated by GMI have a majority of non-independent directors on their boards, 45% have no independent directors at all and 30% comprise executive directors only. GMI also found some remaining problems with cross-shareholdings (5%) and a sizable proportion of companies with poison pills (30%). The average rating for Israel was only 3.88, largely due to non-independent boards, with only one of the 16 companies rated by GMI having an independent Chairman (most are nominated by the majority owner or an executive). Disclosure is also below standard, particularly on remuneration issues.
This is a list of countries by average overall rating in corporate governance. Rank Country Companies Average Overall Rating; 1. World Justice Project surveys rule of law and perceptions of corruption in 102 countries, and says governance issues must be measured to boost development. This is a list of country rankings based on indicators that try to measure different comparable characteristics of countries around the world. Most of these rankings.
Israel’s low ranking struck GMI as noteworthy since index compiler MSCI Barra announced earlier this year that Israel would be moving from emerging market to developed market status in 2010. GMI also looked at the average number of red flags assigned to companies in each market. GMI uses red flags to highlight particularly problematic governance developments that have the potential to impair valuation. These include: accounting irregularities, significant related-party transactions, limitations concerning shareholder rights, significant litigation and criminal investigations, among other things. The country with the highest ratio of red flags was Turkey, with an average of 2.73 per company. Microstepping stepper driver.
Russia and China were next, with an average of 2.08 and 2.05, respectively, followed by Chile (1.83) and Hong Kong (1.78). UK companies fared the best in this analysis with an average of only 0.27 flags per company. The average for all companies covered by GMI worldwide was 1.0 flag per company. GMI’s new country rankings are available.
According to GMI President and CEO Howard Sherman, 'Many of the country rankings come as no surprise, as our research and ratings place a great deal of emphasis on transparency and accountability. But a low ranking today also spells opportunity. As emerging markets in particular compete for global capital and develop a cross-border shareholder base, it seems inevitable they will face pressure to become more transparent and less insular. South Africa serves as good example here. Its average rating of 6.49 was the highest among all of the emerging markets we cover and higher than many developed markets. We think that translates into a competitive advantage for the South African economy.' 'Still, country rankings are only a guide,' Sherman added.
'Within each country there are companies with relatively strong or improving governance and those with relatively weak profiles. That is where we and our clients concentrate our research efforts and where the real investment opportunity, or risk, is usually found.' About GMI: GMI ratings, research reports and e-Alerts are used by a wide array of global financial institutions. Depending on the organization, clients use GMI as part of their overall investment research strategy, to support corporate engagement programs and ESG-specific research and investment products, and to help assist with portfolio risk analysis. GMI is often combined with traditional analytical tools such as discounted cash flow or financial ratio analysis to create more robust valuation models. GMI publishes new research reports for all companies covered on a quarterly basis and conducts interim re-ratings when events so warrant.
Additional information can be found.
Based on a long-standing research program of the, the Worldwide Governance Indicators capture six key dimensions of (Voice & Accountability, Political Stability and Lack of Violence, Effectiveness, Regulatory Quality, and Control of ) between 1996 and present. They measure the quality of governance in over 200, based on close to 40 data sources produced by over 30 organizations worldwide and are updated annually since 2002. The governance indicators contribute to the growing empirical research of governance which have provided and worldwide with tools for policy reform and monitoring. The indicators, and the underlying data behind them, are part of the current research and opinions that have reinforced the experiences and observations of reform-minded individuals in government, and the private sector, that is key for. Their growing recognition of the link between good governance and successful development, as empirical evidence suggests, has stimulated demand for monitoring the quality of governance across countries and within individual countries over time.
Virtually all of the individual data sources underlying the aggregate indicators are, along with the aggregate indicators themselves, publicly available. The Worldwide Governance Indicators are a compilation of the perceptions of a very diverse group of respondents, collected in large number of and other cross-country of governance. Some of these instruments capture the views of firms, individuals, and public officials in the countries being assessed. Others reflect the views of and aid donors with considerable experience in the countries being assessed, while others are based on the assessments of commercial risk-rating agencies.
A complementary vision of the macro-level Worldwide Governance Indicators are the, which are country level governance assessment tools developed by the. Contents. Criticisms The Worldwide Governance Indicators offer a useful snapshot of some perceptions of a country’s quality of governance but researchers have pointed out significant problems in their construction.
These critiques have been extensively rebutted by the WGI authors in several publications. These critics have claimed that users often fail to take into account or are not aware of their limitations. Criticisms include:. Not reproducible: Many of the indicators underlying each source’s ratings, are not published. Too complex: The WGI “Control of Corruption” uses 23 combinations of sources just for East Europe and Central Asia.
The sheer number and diversity of indicators, produced by others, in a single WGI make it very difficult to understand. Arbitrary: For example, WGI use the indicator “Environmental regulations hurt competitiveness” from the World Economic Forum’s Executive Opinion Survey, but ignore that Survey’s several questions that give high ratings to countries with a high standard of environmental protection. Absence of an underlying theory of 'good' governance: no normative concept or unifying single theory to distinguish between good or bad governance. When are taxes, labour or environmental regulatory protection desirable and when are they excessive?.
Hidden biases: Low weight given to household surveys relative to the weights of expert assessments and firm surveys. For example, Gallup’s World Poll that asks citizens about their exposure to crime gets zero weight for 'Rule of Law', but Global Insight Business Risk and Conditions, a U.S. Commercial business information provider that measures the crime risk to businesses, gets the third highest weight. Lack of comparability over time and space: For example, the WGI “Control of Corruption” for Eastern Europe and Central Asia has 23 different combinations of sources, but only four pair of countries ratings are based on a common set of sources. Lack of actionability: WGI offers little guidance to concrete actions to improve the quality of governance. For example, an indicator for Rule of Law 'how secure business people feel about their property' not why they feel that way.
Over-selling: The World Bank Institute advertises its WGIs as 'reliable measurements of governance', but for example gives the misleading impression that the views of ordinary citizens are well represented, making the indicators particularly attractive to donor agencies concerned about the poor. WBI heavily stressed inclusion of the Gallup World Poll, a cross-country household survey available for a large number of countries, but Gallup’s World Poll gets zero weight on two WGIs, marginal weight on two other WGIs and provides no data for the remaining two. Lack of conceptual clarity: “The six governance indicators measure a broad underlying concept of ‘effective governance’ they appear to say the same thing, with different words the six indexes do not discriminate usefully among different aspects of governance. Rather, each of the indexes – whatever its label – merely reflects perceptions of the quality of governance more broadly. An implication is that they may have limited use as guides for policymakers, and for academic studies of the causes and consequences of ‘good governance’ as well their availability may well have crowded out efforts at measuring the impact of institutions as they really exist in a particular place on real outcomes.'
Strengths Despite the above noted limitations and concerns recent econometric research looking at how reliable some of these indicators are, vis-a-vis data collected from natural experiments and other observational surveys, have actually concluded that the Good Governance Indicators do in fact seem to be measuring, albeit imperfectly, levels of corruption and government effectiveness. See also. (GPRA) and particularly of the GPRA Modernization Act (GPRAMA), which requires U.S. Federal agencies to publish their performance indicators in machine-readable format, like (StratML) - a good practice for agencies at all levels of government worldwide. References. 2010. ^ Kaufmann, Daniel and Kraay, Aart, (November 2002).
World Bank Policy Research Working Paper No. Kaufmann, Daniel, Aart Kraay and Massimo Mastruzzi (2010). 'Response to: What Do the Worldwide Governance Indicators Measure'. European Journal of Development Research.
Arndt, C.; Oman, C. Working Paper MGSoG/2008/WP003. 'What Do the Worldwide Governance Indicators Measure?' European Journal of Development Research. 22 (1): 31–54. Langbein, L.; Knack, S.
'The Worldwide Governance Indicators: Six, One, or None?' 46 (2): 350–370.
Rankings Of Government Officials
Hamilton, Alexander (2017). World Bank Policy Research Working Paper Series. External links. provides transparent source data and references used in the Worldwide Governance Indicators.:Worldwide ratings of country performances on six governance dimensions from 1996 to present.