<b>Amit Tandon:</b> What gets measured can be improved

Quantifying governance practices through development of scorecards is a step in the right direction

One of the more famous expressions in the US Supreme Court is of Justice Potter Stewart, who, in his characterisation of pornography, wrote, “I know it when I see it”, to describe his threshold test for obscenity. One can say something similar about governance. Investors know which is a well governed company — they certainly know the badly governed ones. 

Probe them regarding a wider set of companies and most will give an impressionistic answer — “A” is better governed than “B”, which is better governed than “C” — but falter to say that “C” is better governed than “A”.