Canadian companies such as aluminum maker Alcan Inc rank highest in corporate governance, while Japanese firms such as trading company Mitsui & Co were the lowest, according to an analysis by GovernanceMetrics International.
Following Canada in the rankings on how well companies treated shareholders, disclosed information, and created independent boards of directors were companies in the UK and the US. Just above Japan at the bottom of the list were French companies.
GovernanceMetrics, a New York-based private consultant and rating service, evaluated 1,600 companies in 17 countries on their corporate governance practices, which are increasingly seen as an investment risk factor.
"There are issues spread around the world, from financial disclosure to environmental practices, that represent some element of shareholder risk," said Gavin Anderson, GovernanceMetric's chief executive officer.
Among the findings are that only one company in the Nikkei-225 Stock Average, UFJ Holdings Inc, Japan's fourth-largest bank by assets, has a majority of independent directors on its board.
Mitsui, Japan's second-largest trading company, was implicated in a bid-rigging scandal last year, leading to the resignations of its chairman Shigeji Ueshima, and president Shinjiro Shimizu. Both men have since been hired as advisers to the company, according to GovernanceMetrics.
In Switzerland, GovernanceMetric said that Swatch Group AG, the world's largest watchmaker, is "run like the personal dynasty of the founding family." When G. Nicholas Hayek, Swatch's founder and chief executive officer, retired in January, his son G. Nicolas Hayek Jr. became head of the company. The Hayek family owns about 36 percent of Swatch.
The largest US warehouse-club store chain, Costco Wholesale Corp, employs 10 children and relatives of directors at a cost of almost US$1.2 million a year, according to GovernanceMetrics.
The GovernanceMetric analysis evaluates 600 criteria for each company including board independence and shareholder voting rights.