Corporate accountability has become a major concern in the aftermath of accounting scandals at Worldcom, Enron, and other firms, but a new survey has some reassuring news for shareholders of seven chemical and chemical-related firms.
Air Products & Chemicals, DuPont, General Electric, Great Lakes Chemical, Pfizer, Praxair, and 3M were among 22 companies to receive a perfect 10 score for corporate governance, according to ratings agency GovernanceMetrics International. The rest of the 2,100 companies surveyed worldwide received lower grades, demonstrating that many still have improvements to make.
GovernanceMetrics says it computes the rankings by analyzing more than 600 data points across seven categories: board accountability, financial disclosure and internal controls, executive compensation, shareholder rights, ownership base, takeover provisions, and corporate behavior and social responsibility. Among 18 industry sectors the agency covers, the chemical industry ranked right in the middle, with a 6.5 average for the 63 firms assessed.
GovernanceMetrics—which sells its ratings to investment managers, banks, and insurance firms—issued its first survey in December 2002, not long after the U.S. government issued corporate accountability requirements in the Sarbanes-Oxley Act. Stocks of firms with a perfect 10 perform better than those that don’t rank so high, the agency says.