Monday, October 11, 2010

Can We and Should We Rely on Third Party Ratings of Governance and Risk Management?

Via Marks on Governance. 
A colleague shared this link with me today. It’s an article from the Financial Times (FT) about a study into corporate governance standards: the Resources Global governance index. According to the FT article, corporate governance standards are higher among the 100 largest companies on the UK stock exchange (FTSE) than in other European companies. Individual company performance is rated and publicized.
My question is whether we can actually rely on this study to assess and compare corporate governance.
Standard & Poor’s Rating Services (one of the major credit risk rating agencies) has started to assess corporate risk management programs. You can see more here, and their latest report is here.
Again, my question is whether we can rely on S&P for an accurate assessment of companies’ risk management practices.

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