Is there a relationship between good corporate governance and market capitalisation? So far, there is no evidence to suggest that investors are willing to pay more for companies that adopt good corporate governance norms. Opening your accounts for scrutiny need not make shareholders wealthier. Investors are interested only in the quarterly numbers. The “cleanliness” of these numbers is often glossed over, and all the more so in a euphoric market.
In part, that is because there do exist relationships between non-core functions of a company and market capitalisation. In India, the efficacy of public relations (PR), for instance, is often linked to the rise in share price. So when corporate governance does get management attention, it is largely through the prism of those links. It is not seen as an end in itself—only a means to improve the stock market perception of a company. Unfortunately.
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