Dear employer, a few months ago I was invited to a talk on good governance and business results. I've said when I proposed that I hesitate to accept the invitation. The reason? Within academia there is no conclusion on the issue due to the lack of consensus on the observable variables that have set up good governance, the indicators should measure the results and analysis methodologies, and being that of Thus, one can say that?
In the end I accepted for two reasons: first, showing that they have just commented on this fact, as I was saying something interesting, and second, that despite being the necessary scientific approach, that conclusive results have still not answered the very youth of the area, and therefore, minimal things that worked in one way or another, make no malt and contribute to the debate.
I make my contribution to from a basic analytic approach, but complex. First I put the following question: what are the best-governed companies? The answer is neither easy nor obvious because the assessment of corporate governance is a practice that is barely two years old. One of his references is Governance Metric International (www.gmiratings.com), an agency of government research and ranking of the company, which provides services to investors to carry out operations or to direct voting at General Meetings shareholders, being its main clients institutional investors. In February 2005, GMI was assessed in 3220 companies worldwide. The classification system is based a lot of information on six major categories: board accountability, financial transparency and internal controls, executive remuneration, shareholder rights, ownership structure and to the takeover provisions, and corporate behavior and social responsibility.
So, I used data from GMI to answer the question posed above. By country, and on a scale of 0 to 10, are the British (352) with 7.39 points, followed by Canadian (101) with 7.14, and the U.S. (1727) with 7.03 . The Spanish (39) suspended in a 4.81. The worst are the Greek (23) with a 2.37. Individually, the companies have a 10 punctuation there are only 34 of over 3000: 27 U.S., 3 Canadians, 3 British and 1 Australian; result has much to do with the number of companies analyzed in the respective countries, but also, and this is a global result, the Anglo-Saxon companies have better corporate governance than the rest.
Views best governed companies, the next question should be: what results they get? To address the response and views of the difficulties I have mentioned, I rephrase the question, considering the business market in New York and London, many of the well-governed companies are among the first hundred? Based on the assumption that the value of market capitalization could be a good indicator of results and considering that the top of the rankings of the top hundred companies referenced markets respond to changes made structural and cojunturals.
The result was that within the 34 best-governed companies, according to GMI, 9 of the 27 U.S. listed on the NYSE U.S. 100 Index, including General Electric Company No. 1 of this index, and 2 of 3 in the British FTSE 100, being, moreover, the two higher capitalization - Vodafone and BP -.
Dear employer, at this point what do I dare say, and what I said during the talk that I was saying at first, is that the company might not be better ruled that the obtain the best results, but it sure is getting good results in minimum standards of good governance.
They have chosen the relationship between good governance and business performance for the article this week, retomant that speech a few months ago, I suggested the news that, indeed, General Electric had increased by 25% and net profit 19% of sales in the first quarter. At least in one case, good government means business results.
For those who do not know, and who wants to think about it, General Electric is a small company that was created in 1890 the inventor Thomas Edison.
Joseph Albet
Professor at ESADE
Director DIRECTORS ALBET BCN
