Grimminger, Andreas D.Di Benedetta, Pasquale2013-12-272013-12-272013-06https://hdl.handle.net/10986/16448Stock exchanges around the world have launched Corporate Governance Indices (CGIs), sometimes as part of a broader Environment, Social, and Governance (ESG) initiative. The comprehensive analysis of these indices presented in this study is the first of its kind, and it reveals that CGIs have a positive impact, enhancing legal and regulatory frameworks by extending governance criteria to develop objective and measurable benchmarks. The study also shows that CGIs present companies with an opportunity to differentiate themselves in the market and, ultimately, offer companies an incentive to adopt better governance practices. Nevertheless, as the process for vetting and evaluation of companies for inclusion in the indices continues to evolve, access to underlying methodologies, disclosure of the ratings and self-assessments of individual companies, and of overall monitoring processes and procedures can still be enhanced. This study reviews the different approaches used by stock exchanges to build indices incorporating corporate governance. In the case of ESG indices, the focus is on the governance component of these indices. The study also draws lessons from the stock exchange's experiences and highlights success factors and shortcomings. In particular it addresses the following key questions: (i) what are the key drivers for stock exchanges to launch CGIs; (ii) what are the critical building blocks in the construction of a CGI; (iii) what are the risks faced by those investing in CGIs.en-USCC BY-NC-ND 3.0 IGOACCESS TO CAPITALACCOUNTINGACCOUNTING STANDARDSACQUISITIONSARBITRATIONASSET CLASSESAUDIT COMMITTEEBANKRUPTCYBLUE CHIPBLUE CHIPSBOARD MEMBERSBRIBERYBUSINESS CASEBUSINESS PERFORMANCECAPITAL MARKETCAPITAL MARKETSCAPITAL STOCKCEOCIVIL SOCIETYCO. LTD.CODE OF CONDUCTCOMMON SHARESCOMPANY REPORTSCONFLICT OF INTERESTCONFLICTS OF INTERESTCONFLICTS OF INTERESTSCONTRACTUAL OBLIGATIONCONTRACTUAL OBLIGATIONSCONTROLLING SHAREHOLDERCONTROLLING SHAREHOLDERSCOPYRIGHT CLEARANCECOPYRIGHT CLEARANCE CENTERCORPORATE BEHAVIORCORPORATE DISCLOSURECORPORATE GOVERNANCECORPORATE GOVERNANCE CODECORPORATE GOVERNANCE CODESCORPORATE GOVERNANCE FRAMEWORKCORPORATE GOVERNANCE PRINCIPLESCORPORATE GOVERNANCE STANDARDSCORPORATE INFORMATIONCORPORATE LAWCORPORATE RESPONSIBILITYCORPORATE SCANDALCORPORATE WRONGDOINGCORPORATIONSCREDIBILITYDEBTORDERIVATIVEDERIVATIVE TRANSACTIONSDEVELOPING COUNTRIESDISCLOSURE OF INFORMATIONDISCLOSURE REQUIREMENTSDISPUTE RESOLUTIONDIVIDENDEMERGING MARKETEMERGING MARKET EQUITIESEMERGING MARKETSEMERGING-MARKETENVIRONMENTAL CONSIDERATIONSENVIRONMENTAL ISSUESENVIRONMENTAL MANAGEMENTEQUAL TREATMENTEQUITY SWAPSEXCHANGE COMMISSIONFACE VALUEFINANCE CORPORATIONFINANCIAL CRISISFINANCIAL MARKETFINANCIAL PRODUCTSFINANCIAL STABILITYFINANCIAL STATEMENTSFINANCIAL SYSTEMFINANCIAL SYSTEM STABILITYFIXED INCOMEFOREIGN CAPITALFOREIGN INVESTMENTFOREIGN INVESTORSFUND MANAGERSGLOBAL EQUITYGLOBAL SUSTAINABLE INVESTMENTGOOD CORPORATE GOVERNANCEGOOD GOVERNANCEGOVERNANCE CHALLENGESGOVERNANCE COMPONENTGOVERNANCE ENVIRONMENTGOVERNANCE INDEXGOVERNANCE INDICESGOVERNANCE ISSUESGOVERNANCE PRACTICESGOVERNANCE QUALITYGOVERNANCE STANDARDSHOLDINGSHOME MARKETILLIQUID MARKETSIMPROVING GOVERNANCEINCORPORATEDINDEPENDENCE REQUIREMENTINDEPENDENCE REQUIREMENTSINDEPENDENT DIRECTORINDEPENDENT DIRECTORSINDIVIDUAL COMPANIESINDIVIDUALSINEFFICIENT MARKETSINFORMATION ASYMMETRYINSTITUTIONAL INVESTORSINSTITUTIONAL SHAREHOLDERSINSURANCEINSURANCE COMPANIESINTERNAL CONTROLINTERNATIONAL BANKINTERNATIONAL BEST PRACTICESINTERNATIONAL DEVELOPMENTINTERNATIONAL FINANCEINTERNATIONAL STANDARDSINVESTEE COMPANIESINVESTINGINVESTMENT DECISIONINVESTMENT DECISIONSINVESTMENT MANAGERSINVESTMENT OPPORTUNITIESINVESTMENT PROCESSINVESTMENT PROCESSESINVESTMENT PROFESSIONALSINVESTOR PERSPECTIVEINVESTOR PREFERENCEINVESTOR PROTECTIONINVESTOR RELATIONSISSUANCEJURISDICTIONSLABOR STANDARDSLEGAL ENVIRONMENTLEVEL OF COMMITMENTLIMITEDLIQUIDITYLIQUIDITY REQUIREMENTSLISTED COMPANIESLISTED COMPANYLIVING STANDARDSLOCAL STOCK MARKETLONG-TERM INVESTORSLTD.MAJOR SHAREHOLDERMARKET BENCHMARKMARKET BENCHMARKSMARKET CAPMARKET CAPITALIZATIONMARKET INDEXMARKET REGULATORMARKET VALUEMARKET VALUESMERGERSMINORITY SHAREHOLDERSMONETARY FUNDNEW MARKETOWNERSHIP STRUCTUREOWNERSHIP STRUCTURESPARTYPORTFOLIOPORTFOLIOSPROPRIETARYPUBLIC COMMENTPUBLIC COMPANYPUBLIC INFORMATIONREGULATORSREGULATORY FRAMEWORKREGULATORY FRAMEWORKSREPUTATIONRETURNRETURNSSCANDALSECURITIESSECURITIES FIRMSSECURITIES LAWSECURITIES MARKETSECURITIES MARKET LAWSECURITIES MARKETSSECURITIES REGULATORSETTLEMENTSHAREHOLDERSHAREHOLDER PROTECTIONSHAREHOLDER RIGHTSSHAREHOLDERSSMESME SECTORSOCIAL CRITERIASOCIAL ISSUESSOCIETYSTAKEHOLDERSSTOCK EXCHANGESTOCK EXCHANGESSTOCK INDEXSTOCK MARKETSTOCK PRICESTOCKSSUBSIDIARYSUPPLIERSSUSTAINABILITY INDICESTENDER OFFERSTRACK RECORDTRADINGTRADING SESSIONTRADING VOLUMETRADING VOLUMESTRANSACTIONTRANSPARENCYTURNOVERUNDUE INFLUENCEWorld Bank10.1596/16448