As a leading corporate and legal support firm, London Registrars is acutely aware of the importance of company compliance. Indeed, assisting organisations with governance and compliance lies at the heart of the London Registrars service offering. Now, a new study has found that complying with the UK Corporate Governance Code is linked to a company’s general financial performance.
The study, carried out by advisory and executive search firm Opus Executive Partners, was specifically aimed at the oil and gas sector. However, the findings relate to organisations within any industry; namely that taking corporate governance seriously can improve business performance. The study analysed the financial and governance performance of 130 oil and gas companies listed on the AIM stock market between 2006 and 2011. Each company was scored in terms of company compliance with the UK Corporate Governance Code, a score which was then compared to that company’s financial performance.
Those companies which scored in the top 10 % terms of compliance were found to be delivering an average of 92% increase in shareholder value over the last five years. In contrast the 10% of companies with the worst compliance records had seen an 80% reduction in shareholder values over the same period.
This study confirms what London Registrars already knows by experience to be true: that ensuring effective corporate governance is not about ticking a bureaucratic box, it’s about tightening up processes to be in line with best practice, wherever possible, which can reap financial rewards.