High profile corporate governance scandals and increased shareholder activism are driving better governance practice. As governments and regulators respond to these challenges with the adoption or revision of new corporate governance codes we are seeing an emerging consensus of accepted best practice and this trend is likely to continue. As codes converge and standards improve investors are looking beyond straightforward compliance to seek out factors that contribute to the creation of long term value. However, despite this promising trend important geographical variation in governance practices remains and as EIRIS’ analysis shows some companies and countries still have a long way to go:
• Only 25% of US companies separate the roles of chairman and CEO compared with at least 50% for companies in other developed economies
• Swiss boards have the highest percentage of independent directors (81%) – Germany, Austria and Japan all have less than 10%
• Only 4% of companies in Japan have audit committees comprising a majority of independent directors compared to over 95% in the USA, Canada, the Netherlands, Luxembourg, the UK and Ireland
• Only 22% of companies in Singapore and 25% of companies in Hong Kong have meaningful codes of ethics.
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