Predicting Corporate Governance Ratings

32 Pages Posted: 2 Jan 2014 Last revised: 9 Jan 2014

Date Written: January 3, 2014

Abstract

In this paper we use six governance variables to predict the ISS’s indexes values. Using a sample of 392 UK companies, the results indicate that governance variables can predict the ISS’s governance rates with a higher degree of accuracy and significance. This suggests that corporate governance indexes actually measure what they claim to measure: corporate governance. Moreover, these results suggest that corporate governance indexes’ values are predictable in an out of sample context. So, those wishing to invest in companies with “good” corporate governance can do so by using our ordered probit model applied on observable proxies for corporate governance.

Keywords: Corporate Governance, ISS’s Ratings, Board Independence, CEO Compensation, Ownership Structure and Large Creditors

Suggested Citation

Abdellatif, Ahmed Elbadry and Gounopoulos, Dimitrios and Skinner, Frank S., Predicting Corporate Governance Ratings (January 3, 2014). Available at SSRN: https://ssrn.com/abstract=2373855 or http://dx.doi.org/10.2139/ssrn.2373855

Ahmed Elbadry Abdellatif (Contact Author)

Cairo University ( email )

Al Orman
Giza, Cairo 11435
Egypt

Dimitrios Gounopoulos

University of Bath ( email )

School of Management,
Wessex House, Claverton Down
Bath, BA2 7AY
United Kingdom

Frank S. Skinner

Brunel University ( email )

Kingston Lane
Uxbridge, Middlesex UB8 3PH
United Kingdom

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