Institutional Shareholder Service vs. Governance Metrics International

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Introduction A good number of companies are going through a lot pressure to allow their corporate governance rated by corporate governance firms like Institutional Shareholder Service (ISS) or Governance Metrics International (GMI). This is to ensure that companies can be able to establish the successfulness and response of a company board is. However, instructional investors have started to use the two governance rating when they want to decide on the kind of company to bring in their stock portfolio. Presently, the two governance rating systems GMI and ISS are used by both shareholders and investors to measure good corporate practice in a company. The two systems are very different in a number of ways. GMI rates firms in regards to how they relates to each other instead of some standards or benchmark of good governance. In the evaluation of companies, it relates most firms to similar firms both at local and international level. This is normally carried out base on accountability and ethic practices of the company (Koehn & Ueng, 2005). In contrast, Institutional Shareholders Service (ISS) employs more complete approach and normally use benchmark template when rating companies. Although, both GMI and ISS integrate in a very similar way when evaluating board strength and the entire corporate governance reliability, GMI particularly comprise of a group of corporate social responsibility, while ISS does not appraise the same factor. In both GMI and ISS, the corporate

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