Commercial corporate governance ratings: an alternative view of their use and impact

Lysandrou, P and Parker, D. 2012. Commercial corporate governance ratings: an alternative view of their use and impact. International Review of Applied Economics. 26 (4), pp. 445-463. doi:10.1080/02692171.2011.619971

TitleCommercial corporate governance ratings: an alternative view of their use and impact
AuthorsLysandrou, P and Parker, D.
Abstract

The rise in the popularity of commercial corporate governance ratings is at once a source of dismay and a cause for alarm: the former because they do not appear to give accurate predictions of corporate performance and the latter because they add to the pressure on corporations to adapt their governance structures to a benchmark model that takes no account of the conditions in which they operate. This paper gives an alternative view of the potential use and impact of the commercially marketed governance ratings. It argues that their importance to institutional investors lies in providing them with information that accurately summarises corporate loyalty to shareholders rather than accurately predicts corporate performance. It goes on to argue that the commercial governance ratings can bring benefits to an economy by contributing to a new type of managerial control mechanism that is not only more efficient than hostile takeovers and stock options but also helps to reduce the governance role of these instruments.

KeywordsCommercial corporate governance ratings; institutional investors; gravitational pull control mechanism
JournalInternational Review of Applied Economics
Journal citation26 (4), pp. 445-463
ISSN0269-2171
Year2012
PublisherTaylor & Francis
Digital Object Identifier (DOI)doi:10.1080/02692171.2011.619971
Publication dates
Published in print2012
Published online22 Nov 2011
Published22 Nov 2011

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Permalink - https://westminsterresearch.westminster.ac.uk/item/9zw32/commercial-corporate-governance-ratings-an-alternative-view-of-their-use-and-impact


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