As the global community begins to recover from the “Great Recession,” there is no doubt that investors’ trust in the largest public companies has been damaged.
Thus, earlier this month, Forbes published a list of the most transparent and trustworthy businesses traded on American exchanges. To do this, they turned to independent research firm Audit Integrity. Audit Integrity is a quantitative risk rating company that works to go beyond companies’ income statements and balance sheets to assess the overall health of public companies . This includes statistical analysis of unusual or excessive executive compensations, high levels of management turnover, high levels of insider trading, etc. This data is then used to formulate their proprietary Accounting and Governance Risk (AGR) rating.
Commenting on the companies which placed in the top 100, chief executive of Audit Integrity, Jack Zwingli stated, “These are the good guys. They’ve consistently shown accuracy and transparency in their financial reporting.”
The firm’s proprietary rating methodology seems to be working so far. Forbes noted that the shares of the average company on the 2009 Most Trustworthy Companies were up 53% this past year, compared to 45% for the S&P 500. Audit Integrity also notes that there is direct correlations between their AGR assessments and the likelihood of negative events such as a class-action litigation, poor stock performance, or bankruptcy filings. The full press release as well as list of the 100 most Trustworthy companies can be founded here.
About the Firm
Founded in 2002, Audit Integrity is a quantitative risk rating company based in Los Angeles, California. The firm currently follows over 8,000 North American stocks and 4,000 European Companies using forensic accounting, governance and other risk factors to rate the company’s management and accounting practices. The firm uses a proprietary methodology with extensive data sources and advanced statistical modeling techniques to provide a deep insight into a company’s financial disclosure and governance practices and expose associated risks.