Compliance Return on Investment (ROI)

Shareholder Value

As one industry white paper stated, "It is critically important for top executives to be actively involved in setting governance objectives because they are ultimately responsible for overseeing the risks. Through their involvement, executives can set the proper tone and culture for the firm and ensure all employees are on board with the initiative."

The WSJ recently reported, "The share-price performance increased 27% for companies who complied with internal control rules called for under Sarbanes-Oxley."

Investors believe that good governance is associated with good financial performance and enhanced shareholder value. An Institutional Shareholder Services Study, 2004, found that strong corporate governance was directly related to positive performance in four areas: shareholder returns, profitability, risk and yields. A McKinsey & Company study, 2002, found that more than 80% of investors surveyed would be willing to pay more per share for a well-governed company than a poorly-governed one.

"If Governance is done correctly, there are many benefits to be had. Good corporate governance establishes the right tone at the top of the corporation," said Kim Nelson. "It is good for business practices, for morale, for image, for business partners, for investors, for shareholders, and ultimately for success of the enterprise."