Topic_26_E1 - They are • Ownership Structure •...

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Topic 26, Exercise 1 Corporate Governance Ratings In addition to rating a company’s financial performance, Standard and Poor’s rates companies with respect to their adherence to corporate governance procedures. The purpose of these ratings is to give a company a score related to its adherence to core principles of good governance as set forth by the Business Sector Advisory Group on Corporate Governance to the OECD. The criteria, methodology and definitions for the Corporate Governance Scores can be found on Standard and Poor’s Resource Center. After reviewing the information on the Corporate Governance Scores, answer the following questions: 1. What are the core principles as defined by the Business Sector Advisory Group? The four core principles are: Fairness Transparency Accountability Responsibility 2. What four individual components does Standard and Poor’s use in assigning individual company scores?
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Unformatted text preview: They are: • Ownership Structure • Financial Stakeholder Relations • Financial Transparency and Information Disclosure • Board Structure and Process 3. What are the key factors that Standard and Poor’s uses to evaluate the board structure and process? When evaluating the board structure and process, Standard and Poor’s is examining the ability of the board to provide independent oversight of management performance. The ability of the board to make management accountable to the shareholders is also an important consideration. Separation of board authority is also critical in providing a strong base of outside independent board members. Independent outside membership will help assure better governance. In addition, the selection process and the remuneration of board members are considered. A staggered selection process is less likely to ensure the process of change....
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This note was uploaded on 09/13/2011 for the course FIN 6301 taught by Professor El-asmawanti during the Fall '09 term at University of Texas at Dallas, Richardson.

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