New Scoring and Screening Solution Designed to Help Institutional Investors Identify Governance Risk in Portfolio Companies
Rockville, MD; February 25, 2013 – Institutional Shareholder Services Inc. (ISS), a leading provider of corporate governance solutions to the global financial community, has launched ISS Governance QuickScore, a new quantitatively-based scoring and screening solution designed to help institutional investors identify and manage governance risk in companies held in their investment portfolios.
“As corporate governance plays an increased role in the investment process, institutional investors are increasingly in need of governance data and analytics to support and improve their decision-making,” said Stephen Harvey, Head of the ISS Governance Business. “ISS Governance QuickScore helps investors identify and understand factors within a company’s governance structure and practices that could potentially impact performance.”
The new decile-based scoring solution uses a quantitatively-driven methodology that looks for correlations between governance factors and key financial metrics, with a secondary qualitative overlay designed to ensure alignment with market best practices.
Each company analyzed will receive an overall Governance QuickScore, as well as four separate sub-scores for Board, Executive Compensation/Remuneration, Audit and Shareholder Rights. The scores are determined relative to applicable index and region, will appear on ISS proxy analyses and will be available through Yahoo! Finance, NASDAQ Online and other financial information platforms.
“In back-testing, our model found significant correlation between corporate governance factors and several key performance measures,” said Marija Kramer, ISS’ Head of Product Management and Quantitative Analytics.
Initially, the coverage universe for Governance QuickScore will encompass 4,100 companies across 25 markets, including the largest 3000 U.S. companies by market cap, the largest 250 Canadian companies by market cap and companies in the United Kingdom, Europe, Japan and the Asia Pacific region that are included in the MSCI EAFE index.
“We are confident that ISS Governance QuickScore will prove highly valuable to governance and investment professionals alike because we developed it with their input,” said Yovanka Bylander, ISS Governance QuickScore business development lead. “Without exception, every governance professional, compliance officer, portfolio manager and analyst that helped us validate the Governance QuickScore concept emphasized the need for quantitative tools that complement qualitative governance research to support decision-making.”
