Monday, January 08, 2007
OECD Publishes Assessment Tool
In December, the OECD published Methodology for Assessing the Implementation of the OECD Principles on Corporate Governance. The document is available here.
The OECD's assessment tool contains a chapter on each OECD corporate governance principle and discusses assessment criteria with respect to each principle. The approach used in the methodology is qualitative rather than quantitative, using a scale similar to the scale used in other OECD assessments of observed/implemented, broadly observed/implemented, partly observed/implemented,not observed/implemented, and not applicable. Where a principle has been partly observed/implemented or not observed/implemented, the assessor must analyze why this principle has not been implemented. Is it due to the lack of an appropriate legal framework for regulation or redress of wrongs? Is there poor regulatory enforcement? Are market mechanisms weak?
Due to the qualitative nature of the assessment and the need to apply professional judgment, the OECD notes the importance of a reviewer's familiarity with the corporate landscape in a particular country. Application of anecdotal evidence will be less helpful that application of statistical indicators.