Board Response to Transnational Regulation on Corporate Governance: A Case Study on EU Banking Regulation

Seppo Ikäheimo (), Eduardo Schiehll and Vikash Kumar Sinha
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Seppo Ikäheimo: Department of Accounting, Aalto University School of Business, FI-00076 Helsinki, Finland
Eduardo Schiehll: Department of Accounting, HEC Montréal, Montreal, QC H3S 2A7, Canada
Vikash Kumar Sinha: Department of Accounting, Aalto University School of Business, FI-00076 Helsinki, Finland

Risks, 2023, vol. 12, issue 1, 1-20

Abstract: How does a board of directors respond to stringent transnational regulations on corporate governance? We explore this question in a case study that includes interviews with key governance actors of a bank dealing with regulatory changes in the European Union (EU) initiated in 2010 in response to the financial crisis of 2007–2008. Our findings suggest that transnational regulations introduced a conflicting prescription to the directors, who were caught between two needs: existing local governance practices and transnational regulatory compliance. Contributing to the international corporate governance research, our findings corroborate the resistance to transnational regulations and the distrust attributable to boards of directors’ role struggles and the invasive accountability mechanisms introduced by such regulations. We, therefore, contribute to the ongoing discussion on how the conflicting layers of corporate governance—local versus global—and how the discontinuities between competing existing practices and the prescriptions of transnational regulations can provoke micro-resistance.

Keywords: financial institutions; board of directors; corporate governance; qualitative case study; transnational regulations (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2023
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