Good Governance Reduced Financial Damage
Minneapolis, MN, July 7, 2020 – Magni Global Asset Management LLC (Magni) just updated its analysis of the impact of COVID-19 on equity valuations of countries. The previously documented outperformance continued. In addition, the equity markets of investible countries with women leaders outperformed the equity markets of countries with male leaders by 1214 bps on a YTD basis through the end of June.
Last month, Magni analyzed the impact of COVID-19 response on equity valuations. The Global COVID-19 Index continued to be used in this update as the measure of the effectiveness of a country’s response. The outperformance of the better responding countries increased from 726 bps YTD through May to 780 bps YTD through June.
As part of the analysis, Magni reviewed a variety of characteristics of the countries with a better response to the pandemic. One of the most important distinguishing characteristics across the better performing markets was the prevalence of female leaders.
Eight of the 22 countries with better responses to the pandemic have female leaders, while the 23 countries with worse responses to the pandemic are led by men.
“Magni believes the quality of governance is important investment information. The difference in performance based on gender was amazing and a wonderful surprise. We will be exploring the governance implications,” said Kurt Lieberman, CEO of Magni.
While past performance is not a predictor of future performance, Magni will be tracking to see whether the gaps continue or begin to close over time.
About Magni Global Asset Management
Magni Global Asset Management LLC is a leader in corporate governance research on countries and companies, focusing on the behavior of the entity. Magni developed the Sustainable Wealth Creation principles to evaluate country-level governance. The principles are based on widely accepted economic concepts regarding the accounting, legal, regulatory, adjudicative, and economic infrastructures of countries. Countries with strengths in these areas provide environments conducive to effective corporate governance. Magni’s extensive database contains research on countries across 280 qualitative factors over 17 years.
Magni established the Sustainable Value Creation principles to evaluate public companies. These principles were applied to analyze 468 qualitative factors on each company. In addition to researching each company’s relationship with its shareholders and employees, the assessment also includes relationships with customers, suppliers, competitors, and the communities in which a company operates.