Explanations for corporate governance non-compliance: A rhetorical analysis

Philip J. Shrives and Niamh Brennan ()

CRITICAL PERSPECTIVES ON ACCOUNTING, 2017, vol. 49, issue C, 31-56

Abstract: A central element of many corporate governance codes is the ‘comply-or-explain’ system, whereby companies not complying with corporate governance codes are required to provide explanations for each item of non-compliance. This paper develops a typology for examining the rhetorical strategies companies use to persuade audiences of the need to explain rather than comply. Employing a meaning-oriented content analysis approach, the typology is applied to analyse explanations for noncompliance with the UK’s Corporate Governance Code. The sample comprises non-compliance explanations of UK FTSE 100 companies over two periods (2004/05 and 2011/12). These periods were chosen as they follow substantial changes made in the UK’s 2003 Code and 2010 Code. There were 63 (43) (2004/05 with 2011/12 in brackets) companies not complying with one or more provisions of the Code and 146 (71) explanations for non-compliance. Key rhetorical strategies identified in non-compliance explanations include ‘minimization of negative feelings’ (the damage is not too serious), the use of ‘weasel words’ which disguise non-compliance and ‘transcendence’ (ends justify means). The research shows there is increased use of rhetorical strategies in non-compliance explanations in 2011/12 compared with 2004/05, and the strategies found seem more orientated towards misleading explanations than meaningful convincing rationales. The use of such strategies may lead to mistrust by the market or may damage the ‘comply-or-explain’ system itself. Valid explanations are critical to the working of the ‘comply-or-explain’ system. Understanding the use of rhetoric can be helpful in assessing those explanations.

Keywords: Corporate governance Code; Comply-or-explain; Non-compliance; Explanation; Rhetoric; Typology (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1045235417300850
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:crpeac:v:49:y:2017:i:c:p:31-56

DOI: 10.1016/j.cpa.2017.08.003

Access Statistics for this article

CRITICAL PERSPECTIVES ON ACCOUNTING is currently edited by Marcia Annisette, Christine Cooper and Yves Gendron

More articles in CRITICAL PERSPECTIVES ON ACCOUNTING from Elsevier
Bibliographic data for series maintained by Catherine Liu ().