Corporate governance perceptions continue to rise as a prime factor in market valuation. A recent study found that there is a significant correlation between corporate governance and equity performance. The survey by Dr. Olaf Weber, CEO of GOE(Gesellschaft fur Organization & Entscheidung), is one of the first to tie the non-financial asset of governance to share performance.
I came across this research when I learned of a company called Asset4 in Red Herring. The firm helps institutional investors and hedge funds predict the performance of companies based on non-financial factors. The CEO of Asset4, Peter Ohnemus, has several high quality investors such as Goldman Sachs. According to Ohnemus, only 16 percent of a company’s performance is tied to financials. The remaining 84% is tied to environmental policy and social and governance factors. That is no small statement when it comes to reputation and perceptions. His team has been at work on this analysis for three years and has partners such as GOE, the Swiss Federal Institute of Technology, the International Institute for Management Development, and the Copenhagen Business School. According to Mr Ohnemus, “We intend to be the Bloomberg of extra-financial data.” Another big ambition.
Some of the criteria they look at are eco-friendly product innovation, emission reduction, community relations and board structure.
Worth sharing as the reputation landscape changes all the time.
corporate governance, share performance, board reputation, Asset4, Olaf Weber, Goldman Sachs, Peter Ohnemus, non-financial factors, environmental policy, social and goverance issues, investors, reputation landscape