Conflict Of Interest In Governance Rating Processes

Khaled Zedan, Mansoor Maitah, Abudeltef Galalh


Empirical evidence suggests that there is no correlation between corporate financial performance and the structural mechanism relied upon by rating agencies in their rating system. These agencies take similar approaches, but “differ in details”. They all focus on how companies stack up to the so-called ‘best’ practices, The finding solution starts with the simple identification that one-size-fits-all approaches to corporate governance will not fit any one. The most efficient solution to this failure is to? Reforming these agencies, in the methodology they use. They should charge report users instead of rated companies, thus possibly preventing or minimizing conflict of interest. 


Corporate Governance, Financial Performance, Governance Rating

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