What is a common metric for assessing a company's governance practices?

Board diversity and the ratio of independent directors on the board are widely recognized metrics for assessing a company's governance practices. Governance, a key component of ESG (Environmental, Social, and Governance) criteria, focuses on how a company is managed and controlled.

Diverse boards tend to bring a variety of perspectives and insights that can enhance decision-making and lead to better company performance. The presence of independent directors is also critical, as they are expected to provide unbiased oversight and contribute to effective governance by challenging management and representing the interests of shareholders without conflicts of interest.

Other metrics, such as total assets, the number of employees in management positions, or annual revenue statements, do not provide direct insight into the governance structure or quality of oversight within a company. While those factors can be indicators of a company's overall size or financial health, they do not specifically evaluate how ethical and effective the company's governance practices are. This makes the metrics related to board diversity and independence particularly important for a comprehensive understanding of governance quality.