DEFINITION of 'Corporate Governance Quotient - CGQ'

A metric developed by Institutional Shareholder Services (ISS) that rates publicly traded companies in terms of the quality of their corporate governance. Each public company covered by the metric is assigned a rating based on a number of factors that are considered by the ISS model. Factors used in the CGQ formula include board structure and composition, the executive and director compensation charter, and bylaw provisions.

BREAKING DOWN 'Corporate Governance Quotient - CGQ'

The CGQ serves as a reasonable approximation of the quality of a public firm's corporate governance. Investors seeking to hold shares in a company for the long term will typically be concerned about the quality of their company's corporate governance, as research has shown that a high quality of corporate governance typically leads to enhanced shareholder returns.

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