The High Cost of Governance Deficits: A Case for Modern Governance
Good corporate governance, at its best, serves as the guardrail that keep companies and their boards of directors on track while they move full speed ahead. But in the wake of a corporate crisis or scandal, public and media attention increasingly focuses on directors, asking: “How could the board let this happen?”
This report indicates the advantages companies can gain by practicing modern governance: empowering leaders with technology, insights, and processes to fuel good governance.
The report’s key findings include:
- Companies with strong corporate governance (the top 20%) outperformed the bottom 20% by 15% in the most recent two-year period.
- Companies with corporate crises fueled by governance deficits underperformed their sectors by 35%, on average, a year after the incident, losing approximately $490 billion in shareholder value.
- Two years after experiencing the corporate crisis, companies lost approximately $250 billion of shareholder value, and under performed in their sectors by 45%, on average.