SOURCE: The Corporate Library

The Corporate Library

April 20, 2009 13:46 ET

The Corporate Library Finds Higher Investment Returns After Screening for Corporate Governance Risk

PORTLAND, ME--(Marketwire - April 20, 2009) - A study published by The Corporate Library, an independent corporate governance research firm, found that screening for corporate governance risk may yield superior investment returns. The study, conducted by a third-party analytics firm, compared the performance of a hypothetical "Governance Alpha Fund" (GAF) with the Russell 1000 benchmark over a seven-year period. The hypothetical GAF was created using an exclusionary screen based on The Corporate Library's historical, proprietary governance risk ratings. Over the period of seven years, the GAF outperformed the benchmark by more than 100 annualized basis points. The study found the outperformance was largely attributable to The Corporate Library's proprietary corporate governance screens.

"The hypothetical Governance Alpha Fund sets a strong foundation for the creation of a commercially viable corporate governance-based investment fund," said Ric Marshall, Chief Analyst for The Corporate Library and author of the study.

"This independent analysis provides further validation of the efficacy of our ten years of experience rating corporate governance risks," said Richard A. Bennett, President and CEO of The Corporate Library.

Unlike corporate governance ratings that rank companies based on adherence to a checklist of "best practices," The Corporate Library's ratings are based on proprietary indicators of governance risk and are therefore better designed to assist in investment decision-making than the "one-size-fits-all" ratings produced by a compliance-based model. By screening for companies with poor corporate governance and then eliminating them from a given investment portfolio, The Corporate Library's ratings may be used to inform investment decisions by minimizing exposure to governance-related risk.

The study, titled "Investing In Corporate Governance: Corporate Governance and Investment Returns" is available as a free download from The Corporate Library's online store at http://www.thecorporatelibrary.com/info.php?id=76.

About The Corporate Library

Now celebrating its tenth year, The Corporate Library is an independent research firm focused on the U.S. and Canadian public market which offers corporate governance information products, research services and data products. It produces the definitive ratings of U.S. corporate boards of directors, allowing businesses that subscribe to the service to evaluate governance as an element of investment and other risk. Additional information can be found at www.thecorporatelibrary.com.

Contact Information

  • Contact:
    Cheri Grimmett
    Media Relations, The Corporate Library
    Email Contact
    207 553-5604