The millions of dollars spent by public companies on improving their corporate governance may have been for nought, according to a new study purporting to show that companies with supposedly poor governance standards have substantially outperformed the share market.
A study by the Sydney Business School at the University of Wollongong found that firms regarded as having poor corporate governance standards had delivered investors 5 per cent to 13 per cent higher returns each year than the benchmark stock index over the longer term.
The performance was also broadly based with the "poor" governance firms also doing better on EBITDA, earnings per share, dividends and return on capital. Poor governance firms had EBITDA growth of 19.2 per cent over the five years to the present while the market median was 14.5 per cent.
Strongly performing companies over five years deemed to have poor corporate governance included Jubilee Mines, Metcash, Hills Industries, Gunns and property investor Thakral Holdings.
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