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Goodbye CFRA, Hello Governance Research

In the wake of CFRA’s spinoff, Institutional Shareholder Services Inc. (ISS), a leading proxy research provider, announced it is now distributing third party governance research. The move underlines the question of how well forensic research fits with governance-oriented research.

ISS announced that it has opened its ProxyExchange(TM) platform to third party research and data providers including executive compensation analysis from Farient Information Services, a subsidiary of Farient Advisors, a consulting firm specializing in executive compensation.

Farient Information Services is headed by Jack Zwingli, who led GMI Ratings for a period after the merger of GMI, Audit Integrity and The Corporate Library, the latter founded by two ex-ISS employees, including ISS co-founder Robert A.G. Monks. Small world.

ISS will also distribute research two non-U.S. proxy research providers: UK-based PIRC (Pensions Investment Research Consultants, Ltd.) and Germany’s IVOX.

Last month, ISS’s parent MSCI announced it was selling CFRA, which had been integrated with ISS. The disposal of CFRA and the addition of executive compensation data and international proxy research send the signal that ISS did not find CFRA a good strategic fit. Should we conclude that forensic research is not a good fit with governance research?

The reality is that governance research and forensic research have different consumers within institutional investors. That, combined with the fact that governance research is equally important outside the investor community, make for different product and distribution requirements. Clearly, ISS had trouble reconciling those, or perhaps didn’t bother. It appears that the absence of CFRA is allowing ISS to focus more on its core market.

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