Understanding the determinants of RiskMetrics/ISS ratings of the quality of UK companies' corporate governance practice

Citation

Hussainey K & Al-Najjar B (2012) Understanding the determinants of RiskMetrics/ISS ratings of the quality of UK companies' corporate governance practice. Canadian Journal of Administrative Sciences, 29 (4), pp. 366-377. https://doi.org/10.1002/cjas.1227

Abstract
We examine the determinants of RiskMetrics/ISS Ratings of the quality of UK companies' corporate governance practice and investigate whether corporate governance mechanisms and firm specific characteristics affect these ratings. We also investigate the association between firms' financial distress and these ratings. Using data for nonfinancial Financial Times Stock Exchange (FTSE) 250 firms over the 2003 to 2009 period, we find that board independence, managerial ownership, institutional ownership, firm size, and profitability are associated with firms' corporate governance ratings. In addition, we find that more independent directors on the board, more institutional ownership, and larger size lead to a high level of board-related ratings. Finally, we find no association between corporate governance ratings and financial distress.

Keywords
corporate governance ratings; corporate governance mechanisms; firm-specific characteristics; financial distress; UK évaluations de la gouvernance d'entreprise; mécanismes de gouvernance d'entreprise; caractéristiques liées aux firmes; détresse financière; Grande-Bretagne

Journal
Canadian Journal of Administrative Sciences: Volume 29, Issue 4