Corporate governance in Europe: current status and future trends

Abstract

PurposeTo provide a comprehensive overview of corporate governance practices in the top listed companies in ten European countries.Design/methodology/approachPresents comparative empirical research based on public data from public companies. This survey has been published biennially ever since 1999. We selected the top companies by market capitalization from national indexes (e.g. CAC 40, DAX 30). Each of the 294 companies was rated individually in order to produce a country average, from which we generate a European average. The weighted rating criteria as the same as in our 3 previous surveys, and take into account the working and composition of the board, and disclosure levels.FindingsThe study shows significant progress and more convergence in corporate governance practices. The best‐performing countries in the three previous surveys – the UK, the Netherlands and France – are still at the top, and there is a reduced variance within countries. Boards also continue to work harder, partly explaining the rise in Directors' compensation. Committees are almost universal, although their composition could be improved. Boards are gradually becoming more independent but remain more domestic than the companies themselves. International directors (16 percent) and women directors (now 7 percent) are still not enough in evidence. More progress in corporate governance practices can be expected in the future as we can expect an even greater convergence of board practices between and within European countries.Originality/valueThis study is unique as it provides a reliable comparative picture of board practices across ten European countries and ever since 1999, with the comments of local experts of corporate governance in each market.