Note: The GIM Index describes shareholder protection.
However, it is widely used as an index of corporate
governance quality.
Underlying this simplification is the presumption:
Equity owns firms → corporate governance must serve equity
interests.
In other words,
The only agency conflict that matters is the one between
“equity” and “top management”. Not considered:
•Conflicts among equity holders,
•other stakeholders of the firm,
•Agents outside the firm (e.g., the government).