I poked around a little more, and found that Home Depot (HD Quote - Cramer on HD - Stock Picks) has come a long way since the replacement of the controversial CEO Robert Nardelli -- and it sits among the top of all S&P 500 companies (95.5%, actually) and at a stellar 99.2% among retailers.
I found that most of the other companies I follow were near the top of their industry groups, if not the S&P 500 itself. ISS does publish a list of the top 10 rankings among four key market indices: the S&P 500, MidCap 400, SmallCap 600 and Russell 3000. So do I have the answer to appraising corporate management? In a nutshell, no -- at least, not a complete one. Governance doesn't equal management. A company can have good governance but still have bad or inept management, and can still make bad decisions. A recent Goldman Sachs (GS Quote - Cramer on GS - Stock Picks) study, however, concludes that bad governance leads to trouble, while good governance tends to lead to good corporate results. Specifically:- Better stock price performance. Investing long in top-rated companies and selling short in bottom-rated companies resulted in significant alpha: There is a correlation between CGQ and performance.
- Earnings surprises. Top-rated companies reported positive earnings surprises vs. earnings disappointments for bottom-rated companies.
- Avoidance of bottom dwellers. Using low governance scores to screen out companies with low ratings would have increased returns on the test portfolio.
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