Raising the Bar on Corporate Governance : A Study of Eight Stock Exchange Indices

Stock exchanges around the world have launched Corporate Governance Indices (CGIs), sometimes as part of a broader Environment, Social, and Governance (ESG) initiative. The comprehensive analysis of these indices presented in this study is the first of its kind, and it reveals that CGIs have a positive impact, enhancing legal and regulatory frameworks by extending governance criteria to develop objective and measurable benchmarks. The study also shows that CGIs present companies with an opportunity to differentiate themselves in the market and, ultimately, offer companies an incentive to adopt better governance practices. Nevertheless, as the process for vetting and evaluation of companies for inclusion in the indices continues to evolve, access to underlying methodologies, disclosure of the ratings and self-assessments of individual companies, and of overall monitoring processes and procedures can still be enhanced. This study reviews the different approaches used by stock exchanges to build indices incorporating corporate governance. In the case of ESG indices, the focus is on the governance component of these indices. The study also draws lessons from the stock exchange's experiences and highlights success factors and shortcomings. In particular it addresses the following key questions: (i) what are the key drivers for stock exchanges to launch CGIs; (ii) what are the critical building blocks in the construction of a CGI; (iii) what are the risks faced by those investing in CGIs.

Bibliographic Details

Main Authors:	Grimminger, Andreas D., Di Benedetta, Pasquale
Language:	English en_US
Published:	World Bank and the International Financial Corporation, Washington, DC 2013-06
Subjects:	ACCESS TO CAPITAL, ACCOUNTING, ACCOUNTING STANDARDS, ACQUISITIONS, ARBITRATION, ASSET CLASSES, AUDIT COMMITTEE, BANKRUPTCY, BLUE CHIP, BLUE CHIPS, BOARD MEMBERS, BRIBERY, BUSINESS CASE, BUSINESS PERFORMANCE, CAPITAL MARKET, CAPITAL MARKETS, CAPITAL STOCK, CEO, CIVIL SOCIETY, CO. LTD., CODE OF CONDUCT, COMMON SHARES, COMPANY REPORTS, CONFLICT OF INTEREST, CONFLICTS OF INTEREST, CONFLICTS OF INTERESTS, CONTRACTUAL OBLIGATION, CONTRACTUAL OBLIGATIONS, CONTROLLING SHAREHOLDER, CONTROLLING SHAREHOLDERS, COPYRIGHT CLEARANCE, COPYRIGHT CLEARANCE CENTER, CORPORATE BEHAVIOR, CORPORATE DISCLOSURE, CORPORATE GOVERNANCE, CORPORATE GOVERNANCE CODE, CORPORATE GOVERNANCE CODES, CORPORATE GOVERNANCE FRAMEWORK, CORPORATE GOVERNANCE PRINCIPLES, CORPORATE GOVERNANCE STANDARDS, CORPORATE INFORMATION, CORPORATE LAW, CORPORATE RESPONSIBILITY, CORPORATE SCANDAL, CORPORATE WRONGDOING, CORPORATIONS, CREDIBILITY, DEBTOR, DERIVATIVE, DERIVATIVE TRANSACTIONS, DEVELOPING COUNTRIES, DISCLOSURE OF INFORMATION, DISCLOSURE REQUIREMENTS, DISPUTE RESOLUTION, DIVIDEND, EMERGING MARKET, EMERGING MARKET EQUITIES, EMERGING MARKETS, EMERGING-MARKET, ENVIRONMENTAL CONSIDERATIONS, ENVIRONMENTAL ISSUES, ENVIRONMENTAL MANAGEMENT, EQUAL TREATMENT, EQUITY SWAPS, EXCHANGE COMMISSION, FACE VALUE, FINANCE CORPORATION, FINANCIAL CRISIS, FINANCIAL MARKET, FINANCIAL PRODUCTS, FINANCIAL STABILITY, FINANCIAL STATEMENTS, FINANCIAL SYSTEM, FINANCIAL SYSTEM STABILITY, FIXED INCOME, FOREIGN CAPITAL, FOREIGN INVESTMENT, FOREIGN INVESTORS, FUND MANAGERS, GLOBAL EQUITY, GLOBAL SUSTAINABLE INVESTMENT, GOOD CORPORATE GOVERNANCE, GOOD GOVERNANCE, GOVERNANCE CHALLENGES, GOVERNANCE COMPONENT, GOVERNANCE ENVIRONMENT, GOVERNANCE INDEX, GOVERNANCE INDICES, GOVERNANCE ISSUES, GOVERNANCE PRACTICES, GOVERNANCE QUALITY, GOVERNANCE STANDARDS, HOLDINGS, HOME MARKET, ILLIQUID MARKETS, IMPROVING GOVERNANCE, INCORPORATED, INDEPENDENCE REQUIREMENT, INDEPENDENCE REQUIREMENTS, INDEPENDENT DIRECTOR, INDEPENDENT DIRECTORS, INDIVIDUAL COMPANIES, INDIVIDUALS, INEFFICIENT MARKETS, INFORMATION ASYMMETRY, INSTITUTIONAL INVESTORS, INSTITUTIONAL SHAREHOLDERS, INSURANCE, INSURANCE COMPANIES, INTERNAL CONTROL, INTERNATIONAL BANK, INTERNATIONAL BEST PRACTICES, INTERNATIONAL DEVELOPMENT, INTERNATIONAL FINANCE, INTERNATIONAL STANDARDS, INVESTEE COMPANIES, INVESTING, INVESTMENT DECISION, INVESTMENT DECISIONS, INVESTMENT MANAGERS, INVESTMENT OPPORTUNITIES, INVESTMENT PROCESS, INVESTMENT PROCESSES, INVESTMENT PROFESSIONALS, INVESTOR PERSPECTIVE, INVESTOR PREFERENCE, INVESTOR PROTECTION, INVESTOR RELATIONS, ISSUANCE, JURISDICTIONS, LABOR STANDARDS, LEGAL ENVIRONMENT, LEVEL OF COMMITMENT, LIMITED, LIQUIDITY, LIQUIDITY REQUIREMENTS, LISTED COMPANIES, LISTED COMPANY, LIVING STANDARDS, LOCAL STOCK MARKET, LONG-TERM INVESTORS, LTD., MAJOR SHAREHOLDER, MARKET BENCHMARK, MARKET BENCHMARKS, MARKET CAP, MARKET CAPITALIZATION, MARKET INDEX, MARKET REGULATOR, MARKET VALUE, MARKET VALUES, MERGERS, MINORITY SHAREHOLDERS, MONETARY FUND, NEW MARKET, OWNERSHIP STRUCTURE, OWNERSHIP STRUCTURES, PARTY, PORTFOLIO, PORTFOLIOS, PROPRIETARY, PUBLIC COMMENT, PUBLIC COMPANY, PUBLIC INFORMATION, REGULATORS, REGULATORY FRAMEWORK, REGULATORY FRAMEWORKS, REPUTATION, RETURN, RETURNS, SCANDAL, SECURITIES, SECURITIES FIRMS, SECURITIES LAW, SECURITIES MARKET, SECURITIES MARKET LAW, SECURITIES MARKETS, SECURITIES REGULATOR, SETTLEMENT, SHAREHOLDER, SHAREHOLDER PROTECTION, SHAREHOLDER RIGHTS, SHAREHOLDERS, SME, SME SECTOR, SOCIAL CRITERIA, SOCIAL ISSUES, SOCIETY, STAKEHOLDERS, STOCK EXCHANGE, STOCK EXCHANGES, STOCK INDEX, STOCK MARKET, STOCK PRICE, STOCKS, SUBSIDIARY, SUPPLIERS, SUSTAINABILITY INDICES, TENDER OFFERS, TRACK RECORD, TRADING, TRADING SESSION, TRADING VOLUME, TRADING VOLUMES, TRANSACTION, TRANSPARENCY, TURNOVER, UNDUE INFLUENCE,
Online Access:	http://documents.worldbank.org/curated/en/2013/06/17886797/sustainability-indices-raising-bar-corporate-governance-study-eight-stock-exchange-indices https://hdl.handle.net/10986/16448
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