Raising Minimum Governance Standards

Research Paper
December 7, 2015
Preview
Institutional investors concerned with excessive focus on short-term results are increasingly seeking to improve minimum corporate governance standards of their portfolio companies. To date, active engagement has been widely recognized as an effective means to promote sustainable long-term growth and risk management of a portfolio, but such approaches can be costly and difficult to scale. We put forward a potential approach for institutional investors to systematically raise minimum governance standards for portfolio companies by taking quality metrics — an established approach of gaining exposure to companies with enduring business models — and overlaying them with non-financial corporate governance criteria.

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