CFA Institute Writes the Book on Corporate Governance Analysis
Much has changed in the corporate governance world in the last decade. In response, CFA institute in September published the third edition of The Corporate Governance of Listed Companies: A Manual for Investors, updating the 2009 edition. The manual is a resource to help investors understand better the key concepts in corporate governance so they can better understand the corporate governance risks and opportunities present in their investments.
The 2005 first edition of the manual served as a basic primer on corporate governance (corporate governance 101 if you will). Since that publication, the integration of corporate governance analysis in the investment process has grown substantially, necessitating a more sophisticated consideration of the governance issues currently consider by investors around the world.
CFA Institute assembled a global panel of corporate governance experts from around the world to update the manual and ensure that it includes the most germane issues in corporate governance today. The manual focuses broadly on the three main components of corporate governance at publicly traded companies: the board, management, and shareowner rights.
New issues covered in the manual include the following:
- Adoption of Stewardship Codes: Many markets have adopted investor stewardship codes to promote better governance among investors and to promote best practices in engagement with investors.
- Increased Engagement: Levels of engagement have increased between institutional investors and investors on governance issues.
- Proxy Access: Proxy access was introduced in the United States in 2015 when investors began filing more shareowner proposals seeking access to the corporate proxy. This led to many companies engaging with investors to allow investors to nominate one or two directors to the proxy ballot if they owned 3% of the company’s shares for three years.