Benefits of Good Corporate Governance
Is Governance just a compliance headache? No. It has massive ROI.
Key Benefits
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1. Corporate Governance Premium
Global investors (Pension Funds, Sovereigns) will pay a premium (10-20%) for shares of well-governed companies in emerging markets.
- Reason: They trust the numbers. They know they won't be expropriated.
2. Lower Cost of Capital
Banks lend at lower rates because the default risk is perceived to be lower.
3. Better Strategic Decisions
Independent directors bring diverse views, preventing "Groupthink" and verifying the CEO's wild ideas.
4. Resilience
During crises, trusted brands recover faster. When trust is broken (e.g., Maggi lead crisis), recovery is painful.
Note
The McKinsey Study: A famous survey showed that 80% of investors would pay a premium for a well-governed company. In Asia/Latin America, that premium was often over 20%.
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