“Authenticity” is a concept that’s been much discussed of late as the best way to earn and retain loyal customers, but when it comes to the care and keeping of shareholders, “trustworthy” is still the name of the game.
Since 2007, GMI Ratings, now a part of
Kaplan created the company’s AGR rating system, which is still used to build this list, to not only identify nefarious behavior but to spotlight companies that abstained.
“These were major financial disasters predicated on outright fraud,” Kaplan told Forbes in 2014. “I said, ‘I think we can differentiate between companies that may be fraudulent but not yet discovered, and those companies that show governance and accounting transparency.’”
To create this list, MSCI ESG Research screened more than 5,500 publicly-traded North American companies to identify the 100 that most “consistently demonstrated transparent accounting practices and solid corporate governance.” Market caps for each of the companies are listed as of end of day March 7, 2015.
The companies listed here have the strongest AGRs—“Aggressive Accounting and Governance Risk”—the composite scores by which organizations are judged. Factors considered include high risk behaviors like regulatory actions, amended filings, revenue and expense recognition methods, and bankruptcy risk. Companies are scored on a 1 to 100 point scale, with 70 being the lowest score to crack this year’s list.
This year, MSCI placed greater emphasis on issues of corporate governance—for example, accounting issues, late filings, or cases where the chairman is also CEO—excluding companies with the lowest governance scores.
Though none of these events is a surefire independent indicator of wrongdoing, frequent occurrences, or combinations of these behaviors, can raise suspicion.
Of the 100 companies listed here, 40 have appeared on our Most Trustworthy list at least once in the past three years, and 10 companies have appeared at least twice.
It’s important to remember that a company that has previously appeared may easily fall off of a list without any serious fault—with thousands of companies under review for 100 places, the slightest change can skew relative rankings. Similarly, companies that don’t appear on this list aren’t necessarily engaged in wrongdoing, these are merely the 100 with the most positive reputations this year.
Within the full list of 100 companies, organizations are sorted into three groups: large cap companies with market caps of $5 billion or above, mid cap companies with market caps between $1 and $5 billion, and small cap companies with market caps between $250 million and $1 billion.
“In each grouping,” states MSCI, “we highlight companies that are most transparent and reporting accurately on their financial outcomes, whether good or bad.”
This year, four companies garner AGR scores of 100 (on a 100 point scale.)
Among large cap companies, automotive supplier Magna International comes in first, with a current AGR of 99 (Magna is headquartered in Canada, but qualifies for this list as a North American company that trades on the NYSE). The aforementioned Con-way Inc. and Equity Lifestyle Properties tie for first among mid cap companies with AGRs of 100, while Stepan and Tower International share the lead among small caps, both with AGRs of 100.
In general, companies that make this list can be relied upon to accurately report financial outcomes, for better or worse. So while there’s no guarantee that an honest company is a thriving one, the majority of the companies here are financial sound, demonstrating strong stock performance, and providing shareholders with greater levels of transparency.
Companies are grouped by cap size and listed alphabetically.
In pictures: The Most Trustworthy Large Cap Companies In America
Note: A previous version of this post misstated the companies that earned the highest scores within the mid and small cap tiers. They are Con-way, Equity Lifestyle Properties, Stepan Company, and Tower International.
