ISS to Introduce Corporate Governance Index

August 22, 2001 ( - Institutional Shareholder Services, which advises investors on proxy issues, is developing a rating system that could provide institutional clients with an easy measure of a company's record on corporate governance.

The measure will take the form of a corporate governance quotient (CGQ), with scores falling between zero and one hundred. The index would reflect more than 50 governance practices, with 40% of the grade devoted to board issues, according to Dow Jones.

Coverage is expected to begin with the Russell 3000 and later expand to the entire universe of nearly 10,000 US public companies that the proxy advisor follows.

The scores will be included in the firm’s corporate analyses and are expected to be used by institutional investors as investment screening devices or as a tool in deciding which way to vote in close merger contests.