Proxy advisory firm Institutional Investor Advisory Services (IIAS), on Thursday, released its corporate governance score for the top BSE 100 companies. According to IIAS, 2022 saw the median score of BSE 100 companies decrease marginally to 61 from 62 during 2021. IIAS considers categories such as rights and equitable treatment of shareholders, role of stakeholders, disclosures and transparency, responsibilities of the board to arrive at the total score out of 100.
IIAS said companies continued to score well in the category of disclosures and transparency, driven by regulatory requirements. Industry-wise, Information Technology companies remained the top scorers in the corporate governance index followed by financial, consumer staples, materials, consumer discretionary, industrial, telecom and utility, energy and healthcare companies.
The proxy advisory firm report report said HDFC Life, HDFC, Infosys, Mahindra, Marico and Wipro were the top scorers in the corporate governance index.
Do markets value governance?
“Our analysis is that markets do value governance. At a portfolio level, companies that are well governed (those with a score of 60 and more) tend to show better price performance over a period of time than those that are not well governed (score of less than 60). This has been tested for companies we scored in 2017, 2018, 2019 and 2020,” IIAS said in its report.