Quantifying Company Director performance

Tom McKay

Quantifying Company Director performance. A new report reveals what we all probably guessed a long time ago... company directors with ''skin in the game'' generally outperform - by a lot. A new report by Macquarie Equities, Board Matters, found that companies that had directors holding stock had better shareholder returns and return on equity. Using a long-short back-test analysis, it found that return on equity was 13.7 percentage points higher and relative share price outperformance was 8 per cent. The Macquarie report also analysed tenure and the impact of independent directors with interesting results. ''In our analysis, companies that have independent directors that have served for a longer period on the board had a superior ROE compared to those boards with shorter tenure using the five-year test period. This could indicate that corporate memory and experience can enhance returns.'' Read more: (VIEW LINK)


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