Corporate governance rating agency Governance Metrics International (GMI) has disclosed the results of its annual evaluation of governance practices in 4,200 companies worldwide, including 600 from developing countries and 60 from Brazil. In the end, the agency assigned a score to each company, from 1 to 10, after analyzing about 400 corporate governance variables relative to six subjects: rendering of accounts by the board of directors, financial transparency and internal controls; executive compensation; shareholder rights; ownership structure; and provisions against hostile takeovers. Also, in this edition, the agency took into account other aspects of corporate behavior and social responsibility.

Brazil showed a slight improvement relative to last year. Brazilian companies received an average score of 4.18, putting the country in 29th place among the 38 that were assessed. In 2007, Brazilian companies scored an average of 4.08, rating 31st among 37 assessed countries. Despite the improvement, Brazil still achieved a lower average than other developing countries, such as South Africa, India, Turkey and Thailand. The five worst ratings went to Japan, China, Mexico, Indonesia and Chile. At the other end, Ireland achieved the best rating, with an average score of 7.55. Australia, 2007’s leader, fell to fourth place this year. In addition to the two latter countries, the top 5 finished off with Canada, the United Kingdom and the United States, and remained unaltered relative to the 2007 addition.

In addition to its annual rating, GMI disclosed that UBS had acquired a minority stake in GMI. With this move, UBS analysts will have access to GMI’s entire database, enabling them to more precisely take aspects of corporate governance into account in their recommendations to buy or sell stocks. According to Mark Steinert, the bank’s global chief of equity research, “now, more than ever, assessing governance characteristics is a critical factor in investment analysis”.