Canadian association celebrates 10 years with academic study
The Canadian Coalition for Good Governance (CCGG) is celebrating its 10th anniversary. Operating under a model similar to Amec’s, CCGG gathers 47 institutional investors responsible for managing $2 trillion USD in Canadian investors’ assets. Its mission is to represent institutional investors, promote good governance practices, enhance the regulatory environment and collaborate with a greater alignment among the interests of companies’ Boards and managers and their shareholders.
The date is being celebrated with the publishing of an academic study that shows the impact of CCGG’s engagement policy on the decisions of Canadian companies’ Boards of Directors. The policy involves meetings with some companies’ Boards and the advocating of some measures, among which the majority voting (shareholders’ votes including recommendations on the executives’ compensations) and the compensation structure and disclosure (introduction of limiting concepts on executives’ compensations and more transparency in packages).
The professors Craig Doidge and Alexander Dyck, from Toronto University, have analyzed the impact of CCGG’s actions on the companies with which the association is engaged and concluded that, in fact, the adoption of good practices recommended by CCGG is positively impacted as a result of the institution’s engagement. The authors concluded that the probability of adopting, for example, the ‘say on pay,’ increases in up to 30% as a result of the engagement with CCGG. The same happens when it comes to the recommendations on the executives’ compensation structure.
The study final message is that coordinated actions among institutional investors and managers can eventually drive the adoption of important practices in the companies invested.
A summary of the study can be found at http://www.ccgg.ca/site/ccgg/assets/pdf/prof._dyck_-_can_institutional_investors_improve_corporate_governance_through_collective.pdf.
