Citation

Publication Date: 2010-12-01
Format: Journal Article
Bibliography: Robert M. Daines, Ian D. Gow, David F. Larcker, Rating the Ratings: How Good Are Commercial Governance Ratings?, 98 Journal of Financial Economics 439 (2010).

More

Proxy advisory and corporate governance rating firms (such as RiskMetrics/Institutional Shareholder Services, GovernanceMetrics International, and The Corporate Library) play an increasingly important role in U.S. public markets. They rank the quality of firm corporate governance, advise shareholders how to vote, and sometimes press for governance changes. We examine whether commercially available corporate govern- ance rankings provide useful information for shareholders. Our results suggest that they do not. Commercial ratings do not predict governance-related outcomes with the precision or strength necessary to support the bold claims made by most of these firms. Moreover, we find little or no relation between the governance ratings provided by RiskMetrics with either their voting recommendations or the actual votes by shareholders on proxy proposals.

Other publications by this author

View All

• Recent Developments in Shareholder Litigation Involving Mergers and Acquisitions. March 2012 Update
  2012-03-27
• Rating the Ratings: How Good Are Commercial Governance Ratings?
  2008-06-26
• Economic Analysis fo Corporate Law
  2008-04-01
• PeopleSoft Finally Accepts Oracle's Offer(B)
  2006-06-13
• Oracle's Hostile Takeover of PeopleSoft(A)
  2006-05-30
• The Good, The Bad, And The Lucky: CEO Pay and Skill
  2005-01-01
• The Good, the Bad, and the Lucky: CEO Pay and Skill
  2005-01-01
• Agents Protecting Agents: An Empirical Study of Takeover Defenses in Spinoffs
  2004-01-01
• The Incorporation Choices of IPO Firms (Initial Public Offerings)
  2002-01-01
• Do IPO Charters Maximize Firm Value? Antitakeover Protection in IPOs
  2001-01-01