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A market for the well governed
Does good corporate-governance pay? A new stock market—the STAR exchange, launched in April 2001 by Italy's Borsa Italiana for companies that follow a strict set of governance requirements—provides more evidence that it does. Listed companies must have a minimum number of independent, nonexecutive directors; ensure that the compensation of managers and directors reflects their performance; and adhere to rigorous disclosure requirements.
The take-away: Companies on the STAR exchange outperformed those on the main board by 16.5 percent and had a weighted average market-to-book ratio of 3.8, compared with 2.1 on the main exchange.
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