Abstract
This study aims to investigate the level of compliance with CG mechanisms and accountability in Libyan listed companies. It adopts a qualitative approach, using semi-structured interviews to collect the required data from two broad stakeholder groups: internal stakeholders (ISG) and external stakeholders (ESG). The findings of this study provide evidence that Libyan listed companies are to some extent committed to implementing CG mechanisms, but that CG and accountability practices are still at an early stage of development in the country and there are significant weaknesses in terms of practice. Listed companies’ commitment is most evident in their adherence to the BoD mechanism, but levels of disclosure and transparency are barely satisfactory; interviewees argued that at present, disclosure and transparency practices in Libya are designed only to meet local, not international, requirements. Listed companies have also taken practical steps towards meeting the LCGC’s requirements regarding the internal and external audit mechanisms, but the general view among ISG and ESG interviewees was that these mechanisms are currently not robust enough to ensure strong internal control systems. Finally, in terms of the shareholders’ rights mechanism, majority shareholders are seen to enjoy much greater protection, both legally and in practice, than minority shareholders. The results of the study reveal that the lack of knowledge and awareness about the concept of CG, the weakness of the Libyan legislative environment and the lack of accountability mechanisms are the most significant factors inhibiting the advance of CG in the Libyan environment. This study helps to enrich our understanding and knowledge of current CG and accountability practices by being the first to investigate CG mechanisms and accountability in Libyan listed companies.
Highlights
Over the last two decades, the debate about corporate governance (CG) has intensified, driven by a string of major corporate collapses in the US and elsewhere e.g. WorldCom, Enron, Parmalat, Arthur Anderson, and Tyco (Steger, 2014; Hamidi & Gabrielsson, 2014; Briano-Turrent & Rodríguez-Ariza, 2016)
The two stakeholder groups were asked for their views on the current level of commitment being shown to these mechanisms within Libyan listed companies: To what extent are Libyan listed companies committed to implementing CG mechanisms and accountability?
All internal stakeholders group (ISG) and external stakeholders group (ESG) interviewees confirmed that boards in Libyan listed companies have no fewer than three members and no more than eleven, the majority of whom are nonexecutive, as stipulated by the Libyan Corporate Governance Code (LCGC) (2007)
Summary
Over the last two decades, the debate about CG has intensified, driven by a string of major corporate collapses in the US and elsewhere e.g. WorldCom, Enron, Parmalat, Arthur Anderson, and Tyco (Steger, 2014; Hamidi & Gabrielsson, 2014; Briano-Turrent & Rodríguez-Ariza, 2016). Subsequent investigations have revealed the role played by weak or nonexistent governance structures (Ghafran & O’Sullivan, 2017) in these corporate failures, which have had long-term economic consequences at both national and global levels (Monks & Minow, 2004; Al-Baidhani, 2015). Interest in CG has grown exponentially, with researchers, theorists and regulators around the world calling for renewed attention to be paid to the improvement of CG and accountability, and international initiatives being launched to improve CG practice (Al-Matari et al, 2012) and develop systems that protect the rights and interests of all stakeholders. There are significant differences between developed countries and Libya in terms of attitudes towards CG and accountability. The level of disclosure and transparency in these companies is barely satisfactory, since, at present, disclosure and transparency practices in Libya are designed only to meet local requirements
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