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Applying 'Comply-or-Explain': Conformance with Codes of Corporate Governance in the UK and Germany (CBR WP No. 389)
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posted on 2023-07-26, 16:52 authored by David Seidl, Paul Sanderson, John RobertsThe comply-or-explain principle is a central element of most codes of corporate governance. Originally put forward by the Cadbury Committee in the UK as a practical means of establishing a code of corporate governance whilst avoiding an inflexible ‘one size fits all’ approach, it has since been incorporated into code regimes around the world. Despite its wide application very little is known about the ways in which managers apply the principle – in particular, how they make use of the option to ‘explain’ deviations. To address this we analysed the compliance statements and reports of 257 listed companies in the UK and Germany, producing some 708 records of deviations, which we used to generate our empirically derived taxonomy of forms of ‘explanation’. We find these varied forms of ‘explanation’ are based in part on different logics of argumentation. This leads to a broader use of the option to ‘explain’ than envisaged by the Cadbury Committee. In addition our country comparison shows significant divergence in compliance patterns in the UK and Germany which may be explained by differences in experience, culture and legal system.
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Refereed
- No
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University of CambridgePlace of publication
Cambridge, UKLanguage
- other
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- Working Paper
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2015-11-05Legacy Faculty/School/Department
ARCHIVED Faculty of Health, Social Care & Education (until September 2018)/Centre for Business ResearchUsage metrics
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