Corporate Governance Ratings: One Score, Two Scores, or More?
Professor Vikramaditya Khanna offers his thoughts on Bebchuk and Hamdani's article in Corporate Governance Ratings: One Score, Two Scores, or More? Khanna begins by offering a succinct summary of the Bebchuk and Hamdani's recommendations and capturing the governance practices that the authors suggest matter most to companies with (CS) and without (NCS) controlling shareholders. Next, he considers whether these differences are supported in the extant scholarship. He considers anecdotal and emprical data from established and emerging markets and concludes that Bebchuk and Hamdani's distinctions find "considerable support" in the literature. Notwithstanding this support, Khanna turns to consider whether the CS-NCS distinction is the optimal one to organize the professors' governance rankings. Although he notes several other potential considerations, he ultimately offers a solution that would retain the simplicity and usefulness of Bebchuk and Hamdani's CS-NCS distinction while providing insight into other salient country- or firm-specific distinctions through subsidiary rankings. Lastly, Khanna offers suggestions for next steps for implementing the recommendations of The Elusive Quest for Global Governance Standards.