GMI Ratings Research Finding: Companies with Bottom-Decile Accounting and Governance Risk (AGR®) Ratings 3.6 Times More Likely to Experience Major Drops in Stock Price

kristy SRI/ESG News, Advisors' Forum

Important research from Ethical Markets advisory board member, Robert A. G. Monks, founder of GMI Ratings

September 25, 2012 in GMI Press Releases
New York — September 25, 2012 — GMI Ratings, the leading provider of research on environmental, social, governance (ESG) and accounting-related risks affecting the performance of public companies, released today a study assessing the relationship between the firm’s proprietary Accounting and Governance Risk (AGR) ratings and the probability of significant drops in the prices of stocks.

The study examined all the companies with market capitalizations of more than $100 million and share prices of at least $3 that experienced price drops of more than 70% in any year between 2001 and 2011. The analysis excluded 2008 data in order to avoid skewing the results with the anomalously frequent major price declines during that year. In aggregate, these screening criteria resulted in a total universe of 28,581 companies, 3% (872) of which experienced share price drops of 70% or more.

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