Compliance with Corporate Governance Linked to Performance, Study Reveals
As a leading corporate and legal support firm, London Registrars (http://www.london-registrars.co.uk/) is acutely aware of the importance of company compliance with corporate governance. Indeed assisting organisations with governance compliance lies at the heart of the London Registrars service offering. Now, a new study has found that complying with the UK Corporate Governance Code is linked to a company’s general financial performance.
The study, carried out by advisory and executive search firm Opus Executive Partners, was specifically aimed at the oil and gas sector, however the findings relate to organisations within any industry; namely that taking corporate governance seriously can improve business performance. The study analysed the financial and governance performance of 130 oil and gas companies listed on the AIM stock market between 2006 and 2011. Each company was scored in terms of company compliance with the UK Corporate Governance Code, a score which was then compared to that company’s financial performance.
Findings showed that the oil and gas sector was generally not complying well with the code of governance. For instance, only 18% of the companies examined had a sufficient level of non-executive directors, while just 16% had appointed a senior non-executive director. The independence of non-executive directors is of clear importance within corporate governance guidelines. However, those companies which scored highly in terms of compliance were found to be united in delivering above-average shareholder returns; the companies which scored poorly were found to have below-average performance, however.
This study confirms what London Registrars already knows by experience to be true: that ensuring effective corporate governance is not about ticking a bureaucratic box, it’s about tightening up processes to be in line with best practice wherever possible. And that doing so reaps tangible financial rewards.
London Registrars helps UK companies of all sizes and in a wide range of sectors to meet the requirements set out in the UK Corporate Governance Code. Find out more about this and all the services from London Registrars at http://www.london-registrars.co.uk/.
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