The research claims that £100 invested in well-governed companies yields a return of £120, compared to £102 for those that are poorly governed.

The worst-offending companies, which breached guidelines in every year from 2003 to 2007, underperformed the average industry-adjusted return on assets by between three and five percentage points a year, claims the study.

ABI’s director of investment affairs Peter Montagnon says: ‘Our growing database has enabled us to look at the impact of corporate governance over a period of time.

‘The results confirm our belief that good governance produces better returns with less volatility – something that long-term savers need.’

The research examined 654 UK FTSE All-Share companies from 2003 to 2007. The results were adjusted to reflect a company’s performance against its industry.

According to ABI, the study confirms that governance drives performance and not vice versa. A lag of two to three years was identified between any breach and its impact on performance.