Corporate governance codes in the European Union

Niels Hermes, Theo J.B.M. Postma and Orestis Zivkov

International Journal of Managerial Finance, 2006, vol. 2, issue 4, 280-301

Abstract: Purpose - The paper seeks to analyze to what extent the contents of corporate governance codes of countries in the European Union are driven by external (internationally accepted corporate governance best practices) or domestic (institutions, culture, etc.) forces. Design/methodology/approach - The paper compares the contents of codes with the priorities set by the European Commission with respect to modernising company law and enhancing corporate governance in the European Union. Findings - The analysis shows that the majority of the codes of the European Union countries are not in full accordance with the priorities of the European Commission. This may reflect that codes are driven by both external and domestic forces. Whether there is a difference between Western European and Central and Eastern European countries in this respect is also investigated, but no difference, at least at the aggregate level of the codes of both groups of countries has been found. Research limitations/implications - The analysis excludes five (prospective) European Union members. The analysis does not provide a comprehensive overview of domestic determinants of why codes of individual countries diverge from the European Union communication. Future research should systematically explore whether and to what extent domestic forces are indeed determining the contents of codes and, if so, which country‐specific forces have an impact on establishing code contents. Originality/value - This paper is the first comprehensive attempt to analyse the contents of corporate governance codes. Such an analysis is important to understand the underlying forces that shape the diffusion of codes and their contents.

Keywords: Corporate governance; Best practice; Organizational culture; European Union (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmfpp:17439130610705490

DOI: 10.1108/17439130610705490

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