“Corporate Governance weight in business evaluation”, AIAF Nr.56, October 2005

The article “Corporate Governance weight in business evaluationby Daniela Carosio, SVI Senior Partner, was published in the AIAF online review Nr. 56 as of October 2005.


Last July 6, 2005, AIAF has organized its first associated meeting about corporate governance and its relevance for financial analysis, in a moment in which CG is showing ethical and regulatory lacks. Professor Carosio, together with other qualified participants, has been asked to develop the topics which are more relevant for financial analysts.

Of particular relevance the introductory speech by Aiaf President, Giampaolo Trasi, highlighting that Corporate Governance is an important intangible asset and among the main value drivers at disposal of the companies. The wish is that the traditional economic and financial analysis is complemented by a specific Corporate Governance analysis on the issuer.

Indeed, as also pointed out by Antonio Tognoli, Aiaf member and ING Bank NV Senior Analyst, the composition of the Board of Directors represents someway a “guarantee” for the respect of the company future growth plans and it should be considered in the evaluation of volatility and of the sustainability of the free cash flows overtime. Not to consider that it is also relevant in the light of business responsibility towards its external stakeholders and the environment, as in the CSR theory.

Professor Carosio then explains that the CG analysis also includes the assessment of the business processes and their value chain, the management of eventual conflicts of interest, of company’s risks and information flows within the company and with third parties, as well as the checks and balances within the Board and with the Statutory Board and the auditors. The adoption of legally binding regulation does not seem a solution, while the “comply or explain” method compared to the “best practice” should be more appropriate.

To find out more, read the full article on the AIAF review.