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International Comparison of Corporate Governance Evaluation System

Author: ZhengDingFeng¡¡YuXiangBai From: www.yourpaper.net Posted: 2009-07-12 01:30:33 Read:
Abstract: In describing the practical significance of the Corporate Governance Evaluation based on major listed companies in the international governance rating system review, pointed out that the major evaluation criteria and the scope of the evaluation system of governance, comparative analysis and the evaluation system governance of our country in order to build a scientific and evaluation helpful. ª¥
Keywords: corporate governance; the Governance Evaluation; evaluation system ª¥

1 Corporate Governance Evaluation of practical significance ª¥

Corporate Governance Evaluation of practical significance is mainly due to: (1) For external investor decision-making guidance. Corporate governance evaluation so that investors can understand the situation of each company's governance, the governance of the different companies, by the evaluation contrast to grasp the risks that may exist in the company's investment, in order to make better investment decisions. (2) the impact of the company itself. The existing management of the Company and the shareholders of the Company will take into account the results of the evaluation of corporate governance will be the concern of external investors, creditors and other stakeholders of equity and debt financing until the value of the company, which the company acquired from outside the company itself evaluation of corporate governance can recognize their own advantages and disadvantages, and the main problem, and provide direction for the company to improve governance, which will help companies to establish implementation of corporate governance strategy, efforts to improve the state of governance, improve governance. (3) the role of securities regulators and trading institutions. Objective evaluation of governance can make the right judgments, securities institutions and trading organizations for the effectiveness of the governance of companies conduct supervision and guidance of the company in order to make the correct action. ª€

2 major international listed companies Governance Evaluation System ª€

2.1 The Standard & Poor's Governance Evaluation System (Corporate Governance "Score CGS) ª¥
Standard & Poor's in early 1998 began to study the method to determine the governance standards of listed companies, and in 2000 began to use this method of governance ratings services. Standard & Poor's Governance Assessment is divided into national score assessment is divided into two parts. ª¥
The State score results of the implementation of three levels of evaluation: strong support (strong support), moderate support (moderate support), weak support (weak support), said foreign department of environmental governance of listed companies, is the country's rule of law measure law enforcement and regulatory requirements and constraints of the corporate governance. The company score results of the corporate governance score (Corporate Governance Scores, CGS), range between 0 and 10. The total score of CGS comprehensive drawn by four dimensions: (1) ownership structure and its impact; (2) the relationship between financial stakeholders; (3) financial transparency and information disclosure; (4) the structure and operation of the board of directors. Where the financial stakeholders, including shareholders and creditors of the company. ª¬ ª© [1] ªª countries rated the company rated the complementary relationship each other but can not decide, so the two ratings can be separated from the comparison between countries. ª€
2.2 Deminor corporate governance rating (Corporate Governance Rating CGR) ª¥
The Deminor company since 1999 the evaluation of governance established evaluation system of corporate governance of listed companies in Europe. The system from the shareholders' rights and obligations, to take over defense range, the three dimensions of corporate governance disclosure, and board structure and function to measure the status of corporate governance. Includes four aspects: the shareholders' rights and obligations, including an interest rate of one share, one vote principle, voting rights restrictions, election issues, the shareholder proposal and election procedures standard; take over the scope of the defense strategy, to investigate the Board arbitrarily used to protection company hostile takeover and deprived of the anti-takeover shareholder rights plan; qualitative and quantitative assessment of the non-financial aspects of corporate governance structure, analysis of the company's disclosure on corporate governance, transparency; structure and role of the Board, the survey related to board governance problems. ª€
The 2.3 the CLSA evaluation system (CLSA) ª¥
Corporate Governance Evaluation of Credit Lyonnais Securities (Asia) in 2001, 495 companies of 25 emerging market countries, the main content of the discipline (management discipline), transparency (transparency), independence (fairness) and cognitive social responsibility (social seven principles of responsibility), etc., to determine the advantages and disadvantages of corporate governance. Evaluation of 57 indicators such as corporate transparency and the protection of minority shareholders, the core business is prominent, whether the debt under control, the cash return to shareholders. Lyon evaluation system from the transparency of the Company, management constraints, the evaluation of corporate governance, the independence and accountability of the board of directors, the protection of minority shareholders, the core business, debt control, shareholders cash return as well as the company's social responsibility and eight status of the evaluation results given the score of 0-100, the higher the rating will illustrate the higher the quality of corporate governance, which focuses on corporate transparency, the independence of the board of directors as well as the protection of minority shareholders, emphasized the company's social responsibility. ª€ 3 major international governance evaluation system compares ª¥

Governance of Listed Companies scientific evaluation system should be able to the situation of each country's governance rating (Mallin, 2000). In the governance evaluation system, only Deminor, Standard & Poor's and CLSA is formulated to target multiple countries. Some evaluation criteria are very similar to the the Deminor evaluation services include a national analysis report by the corporate governance practices within the scope of the legal analysis and country-specific; Standard & Poor's on legal, regulatory, information disclosure and market-based assessment of the effectiveness of the four aspects; CLSA use of macro corporate governance relating to the regulatory and institutional environment determinants of individual market rating. Specific evaluation system evaluation are shown in Table 1. ª¥

Compare Governance Evaluation System specific using standard has the following four characteristics: (1) the evaluation system consists of a series of detailed metrics, and include three factors: shareholder rights, board structure, and disclosure of information to evaluate the level of individual countries. The system then there is a greater difference. (2) in the evaluation system, the scoring method is basically the same. Overall, a lower score means a poor management level, a higher score means a higher status of governance; the vast majority of the evaluation system evaluation methods, using a weight according to the governance the degree of importance of various elements of different given different weights . (4) to obtain the required evaluation information, and are derived from publicly available information, and other information obtained through interviews with key employees of the company. [5]

4 Summary ª¥

In summary, the governance of listed companies the implementation of the evaluation system, mainly by commercial organizations to operate, its advantages, market competition and reputation mechanism will promote the improvement of rating the quality and objectivity. Standard & Poor's, Deminor, Lyon, are operated by commercial organizations, for these companies, the Corporate Governance Evaluation is actually a profitable business. The advantage is operated by the non-profit organization by nonprofit institutions operating in some countries in the room for a good environment of competition and reputation mechanism can improve the credibility and objectivity, and avoid business establishments for the profitability damage rating impartial sexual behavior. ª¥

References ª€

[1] €@ Standard and Poors'Company. Standard & Poors'Corporate Governance Scores: Criteria, Methodology and Definitions. 2004, Revised. ª€
[2] €@ Compensation and Summary of evaluation system of corporate governance at home and abroad [J]. Southwest University for Nationalities, 2005,26 (3) :180-182. ª€
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