Bloomberg’s ESG Governance ISS: Quality Score [GQSÔ]: Vetting Results of a Taxonomic Sorting Trial

Edward J. Lusk1, 2, 3 & Mia Wells4
1Emeritus Professor: [Statistics] The Wharton School, University of Pennsylvania, Pennsylvania, USA
2Emeritus Professor: [Accounting] School of Economics & Business, SUNY: Plattsburgh, Plattsburgh, USA
3Emeritus Chair: [Economics] International School of Management: Otto-von-Guericke, Magdeburg, Germany
4Assistant Director, Lippincott Library of the Wharton School, University of Pennsylvania, Pennsylvania, USA.

Abstract

Context For decades the Environment, Social, and Governance [ESGÓ]-platform offered by BloombergÔ Professional Services has been one of the staple sources of contextual information for better understanding the “Stakeholder-impact” of the firm’s market activities. The ESG-platform now offers a significant enhancement provided as third-party data by Institutional Shareholder Services [ISS]—to wit, a taxonomy where firms are assigned to Governance-risk decile-groups based upon ISS: Governance Quality Scores: (GQS©); where firms in GQS [1] are characterized as relatively higher quality and relatively lower governance risk, and, conversely, a score in the 10th decile, GQS [10], indicates relatively lower quality and higher governance risk. Such market contexting platforms beg vetting studies to service investors in need of an independent and reliable evaluation. Study Design We randomly selected 20 firms—ten each from the polar decile-groups [GQS [1] & GQS [10]]. These firms were profiled by the Bloomberg Analyst Recommendations [ANR©]. The ANR-PDF-captures were not identified as to the GQS-group to which they were assigned by ISS. These 20 ANR profiles were given to nine volunteers with advanced expertise in market-related discipline areas, and they were asked to (i) sort the 20-firms into two groups of equal size, and (ii) note their assignment logic. Results The inferential results are very clear. There is no inferential evidence overall for the assignments made by the volunteers that there are sufficient numbers of triage-matches to the ISS [1] group to reject the Null of Chance of 50%. This is a valuable vetting indication that ISS-Corporate: Governance: Risk-assignments are not surrogate-holomorphs to the relative ANR-profit profiles.

Keywords: ISS-Vetting, Expert Triage, ANR: Bloomberg.

References

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Works Cited

Edward J. Lusk & Mia Wells. (2021). Bloomberg’s ESG Governance ISS: Quality Score [GQSÔ]: Vetting Results of a Taxonomic Sorting Trial. International Journal of Scientific and Management Research, 97-105. doi:http://doi.org/10.37502/IJSMR.2021.4505