Which NZX company has the best corporate governance?

Alex Medland-Slater, financial research officer at the Auckland Centre for Financial Research, says good corporate governance means management and shareholders are on the same page. Photo/Supplied.

A new tool which shows how aligned a company's management is with its shareholders has been released by AUT's Auckland Centre for Financial Research.

The corporate governance index assesses the top 50 companies listed on the New Zealand sharemarket against 17 factors across four categories; shareholder structure, board, independence and remuneration.

Companies can score a maximum of 28 points with independence being given the highest weighting in the index.

Alex Medland-Slater, financial research officer at the Auckland Centre for Financial Research said because shareholders cannot monitor management day-to-day, they rely on the controls and mechanisms of a good corporate governance system to ensure managers act in a shareholders' best interest.

Medland-Slater said the tool was a not a measure of financial value but companies with good corporate governance were more likely to maximise shareholder value and investors could use the index in their investment decision-making process.

"Good corporate governance means management and shareholders are on the same page – maximisation of firm value over the long-term."

Top of the index this year is Kiwi Property Group which scored 26 out 0f 28 in the index.

The bottom ranking was held by Mainfreight which got nine points, scoring poorly for both board and independence factors.

The index will be released annually to allow benchmarking of companies against their peers and own performance over time.