Corporate governance ratings: Harvard Case Solution & Analysis

Corporate governance ratings: Case Study Help

If the company had been ranked number one, it would be assumed that the rating is effective and would generate possible investors in the future. In addition to this, the validity of these ratings should be examined based onmany investors or stakeholders generated with the help of these ratings. For this purpose, a detailed research study should be conducted by intervening with the stakeholders. In addition to this, it is recommended that all the firms had used publicly available information for developing these ratings with the help of different methodologies. Thus, the company should check these ratings with its financial information and firms’ important aspect, then analyze the number the variables a statistical testing tool, which had been used (Sanjai Bhagat, Brian Bolton, Roberta Romano, 2015).

A benefit to Aetna from increased CGQ Rating:

The CGQ rating of Aetna which was about 30 had increased to about 99.7. The assigned rating of Aetna was by the governance system which placed it below its peers. As the increase in the Aetna CGQ rating was dramatically improved by the discovery of mistakes in the calculation. This was supported by the removal of a poison pill provision. The identification of the mistakes provided Aetna with the opportunity to bring improvement in significant areas where it lacked efficient performance. The determination and correction of the mistake were primarily not disclosed by the organization. As a result, after receiving the higher rating from ISS, a press release was declared by Aetna.

Therefore, it significantly allowed the organization to determine the weaken areas publicly disclosure of procedures and policies, specified changes in the bylaws of the organization, reduction in the shareholder approval for mergers to a simple majority from two-thirds. The improvement in the organizational recognition, the reinforcement of importance was based on the placement of sound corporate governance and increase the impact on their efforts for the proper alignment of our corporate governance practices with the interests of shareholders.

Claim on ISS for conflict of interest:

As organizations are known to pay a specific amount for the course of determination of the mistakes which as a result are considered to improve or reduce the rating of the organization by the ISS corporate governance ratings. The payment paid to the ISS for the consulting services and providing access to databases for the determination of the steps required to bring significant improvement greatly influence the charges to the conflict to interest.

As it has been stated that any business cannot be built around conflict. Such services offered by ISS are not offered by other organizations like GMI and TCL. Although the provision of consulting services is considered fine but goes against the industry trend. This is mainly due to the interdependence of board members' executive compensation and the director of elections. This is considered to influence the process of recruitment, selection, employee appointment and promotion and other interrelated activities of the organization. (Strier, 2005)

Conclusion:

The rankings tend to be relative to the forced curve. Whereas the measurement of the risk of corporate governance was not absolute. The corporate governance ratings allow the business entities to significantly obtain a credible and independent assessment of the extent and quality of their respective corporate governance. A detailed comparison of corporate governance could provide an effective rating measure by assuming each rating’s strengths and weaknesses. The behavior, skills, expertise, and other relevant features are known to influence the organizational growth.............................

 

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