Understanding the Determinants of RiskMetrics/ISS Ratings of the Quality of UK Companies' Corporate Governance Practice

Khaled Hussainey , Basil Al-Najjar

Research output: Contribution to journalArticle

11 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)366-377
Number of pages12
JournalCanadian Journal of Administrative Sciences
Volume29
Issue number4
Early online date21 Nov 2012
DOIs
Publication statusPublished - Dec 2012
Externally publishedYes

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