Thai investors urged to seek out good governance

The Thai Institute of Directors (IOD) has highlighted the importance of good corporate governance for investors by creating a new stock market index.

Companies that score more than 90 per cent on the organisation's corporate governance ranking are now listed on the IOD/CG Index, the Bangkok Post reports.

According to the IOD, the performance of this experimental portfolio proves that investing in companies with high standards of transparency and accountability makes good business sense.

An analysis of the index shows that investments based on market value or capitalisation between January 2007 and October 2010 could generate an annualised return of 16.78 per cent.

However, this figure rises to 20.48 per cent for investors who put the same amount of money in companies with good corporate governance, regardless of their size.

IOD consultant Thanomsak Suwannoi said the number of listed stocks on the index will increase from 22 to 70 in 2011.

"There has been a big improvement in corporate governance among listed companies this year," he told the newspaper.

Earlier this year, chairman of the IOD Charnchai Charuvastr told CNBC that Thailand's corporate sector has shown resilience in the face of major political instability.