Comply or explain in corporate governance codes: in need of greater regulatory oversight?

Legal Studies ◽  
2014 ◽  
Vol 34 (2) ◽  
pp. 279-304 ◽  
Author(s):  
Andrew Keay
Keyword(s):  
Corporate Governance ◽  
Regulatory Body ◽  
Regulatory Oversight ◽  
Present Scheme ◽  
Corporate Governance Codes ◽  
The Uk ◽  
A Company ◽  
Code Provisions ◽  
Do So ◽  
Comply Or Explain

At the heart of the voluntary corporate governance code in the UK and elsewhere is the concept of ‘comply or explain’. It provides that a company is to comply with a code's provision; but if it does not do so, then it is to state that it does not and explain why it does not. There is no provision in the UK for any statements by companies to be assessed by any regulatory body. It is incumbent on the markets generally and the company's shareholders specifically to determine whether the response of the company to code provisions does enough, and then to take some action if they do not. The aim of comply or explain is to empower shareholders to make an informed evaluation as to whether non-compliance is justified, given the company's circumstances. This paper assesses whether the present scheme, which relies on the stewardship of shareholders and the efficiency of the markets, should continue, or whether a regulatory body should be empowered to determine whether companies are in fact complying with code provisions or, if not, whether they are providing adequate explanations for not complying.

scholarly journals A comparative analysis of the board evaluation in European entities: Italy vs UK

2016 ◽  
Vol 14 (1) ◽  
pp. 578-587
Author(s):  
Donatella Busso ◽  
Alain Devalle ◽  
Fabio Rizzato
Keyword(s):  
Corporate Governance ◽  
Comparative Analysis ◽  
Board Of Directors ◽  
Boards Of Directors ◽  
Size Composition ◽  
The Self ◽  
Self Assessment ◽  
Corporate Governance Codes ◽  
The Board Of Directors ◽  
The Uk

Board evaluation is an evaluation of the performance of the board of directors and its committees, as well as their size, composition and operation. The aim of this paper is to investigate how entities do the evaluation of the performance of the board and how they disclose the self-assessment. We analysed the largest forty constituents of both Italy’s FTSE MIB index and the UK’s FTSE 100 index. The results show that although Corporate Governance Codes’ requirements are similar, implementation of these requirements and the related disclosure continue to show significant differences. The UK companies seem to have a stronger “forward-looking” approach compared to Italian companies. Disclosure provided by Italian companies is too often not enough to enable stakeholder understanding of the process and its outcome. This research contributes to the literature by providing results on the evaluation of boards of directors: regulators, practitioners and researchers must deal with this topic in order to strengthen the rules of corporate governance.

13. Corporate governance

2018 ◽  
Author(s):  
Derek French
Keyword(s):  
Corporate Governance ◽  
Shareholder Activism ◽  
Listed Companies ◽  
Corporate Governance Code ◽  
The Uk ◽  
Legal Controls ◽  
And Control ◽  
Do So

This chapter surveys corporate governance. It identifies the key problem of the separation of ownership and control in companies that are not owner-managed. Shareholders are seen as the owners of the company but directors manage the company and can do so for their own benefit rather than the shareholders’. There is a list of the numerous legal controls on directors, which are studied in other chapters. There is discussion of two ways of looking at directors, either as stewards who must account for their actions to the owners or as entrepreneurs whose wealth-creating work deserves reward. The UK Corporate Governance Code, which applies to premium listed companies, is discussed, as is shareholder activism.

Mandatory versus Discretionary Rule Dichotomy in the Harmonization of Corporate Governance Codes: Lessons for Nigeria

2019 ◽  
Vol 63 (3) ◽  
pp. 385-411 ◽  
Author(s):  
Collins C Ajibo ◽  
Kenneth I Ajibo
Keyword(s):  
Corporate Governance ◽  
Market Integration ◽  
National Level ◽  
Hybrid Approach ◽  
Critical Issue ◽  
Business Community ◽  
Playing Field ◽  
Governance Systems ◽  
Corporate Governance Codes ◽  
Comply Or Explain

AbstractHarmonizing corporate governance systems can potentially level the playing field for businesses, as it would increase financial and economic interconnections, including market integration, between countries. Although harmonization at the regional level such as the EU seems challenging because systems are so diverse, the reverse is the case at the national level. A critical issue in the harmonization effort is whether to adopt the “comply or explain” approach or the mandatory compliance approach. Although mandatory compliance is necessary in certain circumstances, particularly in cases of corporate pseudo-reporting that occasions corporate failures, the predominant approach involves “comply or explain”. Given competing interests in the business community, the inclination for flexibility and the regulatory authority's disposition for an oversight function, this article argues that a hybrid approach should be followed, which will internalize the merits of both the “comply or explain” and mandatory compliance approaches while eschewing their disadvantages.

Corporate governance codes of Eurasian Economic Union countries: a comparative investigation

2017 ◽  
Vol 17 (4) ◽  
pp. 748-769 ◽  
Author(s):  
Mirgul Nizaeva ◽  
Ali Uyar
Keyword(s):  
Corporate Governance ◽  
Best Practices ◽  
Transition Countries ◽  
Special Focus ◽  
Content Type ◽  
Eurasian Economic Union ◽  
Oecd Principles ◽  
Corporate Governance Codes ◽  
Economic Union ◽  
The Uk

Purpose The purpose of this paper is to comparatively analyze the corporate governance codes of transition economies, particularly five Eurasian Economic Union (EAEU) members (i.e. Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia). Specifically, the convergence or divergence of these countries’ corporate governance codes among themselves as well as relative to the best practices of the UK Corporate Governance Code (UK Code) and the OECD Principles of Corporate Governance are investigated. Design/methodology/approach Initially, the existing literature on corporate governance with special focus on transition countries is reviewed. Afterwards, benchmarking the international best practices, based on main chapters and contents, the corporate governance codes of all countries in the sample are analyzed. Findings The paper finds that even though some principles of the corporate governance codes of the countries in the sample differ in some aspects, they do converge to some extent. However, high misalignments between the UK Code and the OECD Principles and the codes of selected countries in some aspects were found. Research limitations/implications The conclusion and implications of the study characterize the corporate governance of selected developing countries; thus, they might not be generalizable to other countries. Practical implications The codes of the countries in the sample should be revised, and more specifications regarding the stakeholder, board structure, its subcommittees, independence, diversity and transparency issues need to be addressed. Originality/value The paper comprehensively analyzes the contents of corporate governance codes of transition countries; from both practical and academic point of view, it was important gap that needed to be fulfilled.

scholarly journals Corporate Governance in Bangladesh: Evidence of Compliance

2018 ◽  
Vol 11 (3) ◽  
pp. 88
Author(s):  
Chowdhury Saima Ferdous
Keyword(s):  
Corporate Governance ◽  
Multivariate Analysis ◽  
Survey Methodology ◽  
Good Governance ◽  
Stock Exchange ◽  
Theoretical Contribution ◽  
Code Of Corporate Governance ◽  
Code Compliance ◽  
A Company ◽  
Code Provisions

This study investigates companies’ level of compliance with the Code of Corporate Governance for Bangladesh. Using a quantitative approach, it aims to understand the extent a regulatory provision can enhance the governance scenario of a company. It employed a survey methodology, with a questionnaire being sent to all 229 companies listed on the Dhaka Stock Exchange. The results of the multivariate analysis suggest that age, size, industry and type of company have a statistically positive correlation with the level of compliance with the Code provisions. The findings of the study indicate that listed companies are, on average, moderately compliant with the Code, and compliance is comparatively higher with the Code provisions that coincide with other regulatory provisions. The major theoretical contribution of this study is with its empirical evidence of the code compliance literature from a developing country perspective. Moreover the findings can be used as a guide to help develop policies for better implementation of good governance standards; the identification of areas of non-compliance are expected to help code formulators, regulators and also companies to understand why and where companies are falling behind in compliance with the Code.

Does compliance with corporate governance code hinder corporate entrepreneurship? Evidence from the UK

2016 ◽  
Vol 16 (4) ◽  
pp. 765-784 ◽  
Author(s):  
Adel Elgharbawy ◽  
Magdy Abdel-Kader
Keyword(s):  
Corporate Governance ◽  
Structural Equation ◽  
Corporate Entrepreneurship ◽  
Annual Reports ◽  
Organisational Performance ◽  
Trade Off ◽  
Content Type ◽  
Corporate Governance Code ◽  
The Uk ◽  
Comply Or Explain

Purpose This paper aims to investigate the possible trade-off between accountability and enterprise in the context of comply or explain governance. The issue was addressed through examining the effect of compliance with the corporate governance code (CGC) on corporate entrepreneurship (CE) and organisational performance. Design/methodology/approach Based on cross-sectional survey and content analysis of annual reports, the level of CE and compliance with the CGC were measured in the large and medium-listed companies in the UK during 2010. Partial least squares structural equation modelling (PLS-SEM) was used for data analysis. Findings The results suggest no conflict between compliance with the CGC and CE in the UK, which can be attributed to the flexibility of the “comply or explain” approach. This implies that no trade-off between accountability and enterprise in the context of comply or explain governance. Practical implications The study provides evidence in support of the regulatory governance framework in the UK and the comply or explain approach at large. This evidence contributes to the debate on the rules-based or principles-based governance, which may affect future CG regulations. It can also guide the directors to achieve the balance between their conformance and performance roles. Originality/value The study bridges the gap between CG and CE disciplines through developing a theoretical model that integrate contingency and agency theories lenses. Adopting a holistic approach provides insights into the relationships between CG and CE, rather than investigating the effect of each of these practices separately on organisational performance.

13. Corporate governance

2019 ◽  
pp. 343-353
Author(s):  
Derek French
Keyword(s):  
Corporate Governance ◽  
Shareholder Activism ◽  
Listed Companies ◽  
Corporate Governance Code ◽  
The Uk ◽  
Legal Controls ◽  
And Control ◽  
Do So

This chapter surveys corporate governance. It identifies the key problem of the separation of ownership and control in companies that are not owner-managed. Shareholders are seen as the owners of the company but directors manage the company and can do so for their own benefit rather than the shareholders’. There is a list of the numerous legal controls on directors, which are studied in other chapters. There is discussion of two ways of looking at directors, either as stewards who must account for their actions to the owners or as entrepreneurs whose wealth-creating work deserves reward. The UK Corporate Governance Code, which applies to premium listed companies, is discussed, as are shareholder activism and investor stewardship.

6. Corporate governance

2020 ◽  
pp. 107-126
Author(s):  
Lee Roach
Keyword(s):  
Corporate Governance ◽  
Institutional Investors ◽  
Executive Directors ◽  
Governance Mechanisms ◽  
Governance System ◽  
Essential Information ◽  
Corporate Governance Mechanisms ◽  
Corporate Governance System ◽  
The Uk ◽  
Comply Or Explain

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses the UK corporate governance system and some of the key corporate governance topics. It begins by looking at what corporate governance is and how the UK’s corporate governance system has evolved. The chapter then discusses the effectiveness of the ‘comply or explain’ approach. It also discusses a number of key corporate governance mechanisms, namely institutional investors, non-executive directors, and directors’ remuneration.

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