Reasons for Non-Compliance of Good Corporate Governance

Zalfa Laili Hamzah, Noor Adwa Sulaiman and Maria Mohd Ismail
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Zalfa Laili Hamzah: Universiti Malaya, Faculty of Business and Economics
Noor Adwa Sulaiman: Universiti Malaya, Faculty of Business and Economics
Maria Mohd Ismail: Universiti Malaya, Faculty of Business and Economics

Chapter 7 in Concepts of Corporate Governance and Public Governance, 2026, pp 145-153 from Springer

Abstract: Abstract This chapter elucidates persistent issues of non-compliance with corporate governance best practices, analysing its causes, theoretical underpinnings, and consequences. It defines compliance as adherence to legally mandated and voluntarily adopted governance principles that promote ethical conduct, protect stakeholders, and ensure responsible decision-making. Non-compliance whether deliberate or unintentional, which arises from regulatory inefficiencies, economic constraints, cultural and political influences, and organisational resistance. The discussion draws on key theories, including Agency, Stakeholder, Institutional, and Resource Dependence theories, to explain governance failures and selective adherence to standards. Case studies illustrate how strategic bypassing of governance rules may yield short-term gains but lead to long-term costs such as reputational damage, legal penalties, and financial instability. The chapter also contrasts the benefits of strong governance, such as enhanced transparency, investor confidence, and risk mitigation with the severe repercussions of non-compliance, including corporate scandals and systemic economic risks. It concludes that reinforcing governance frameworks, ethical leadership, and regulatory enforcement is essential for sustaining trust, stability, and long-term corporate success.

Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-95-2449-5_7

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DOI: 10.1007/978-981-95-2449-5_7

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