Abstract
Drawing upon neo-institutional theory as the perspective for research on corporate governance, we present the results of empirical studies on compliance with best practice codes. We view the declarations of conformity as the organizational response to institutional pressure and address questions on (1) how companies respond to recommendations on board best practice and (2) how these reactions evolve over time. The study employs the mixed method approach and is based on a time-series sample of conformity declarations published by 126 companies listed on the Warsaw Stock Exchange during the period 2006–2019. Descriptive statistics indicate an increase in the number of complying companies, an improvement in compliance quality and the growing length of conformity declarations. In the content analysis we identify two main reaction strategies (acceptance and rejection) with seven selected responses. We discuss the contribution to the existing literature on reactions to new practices in corporate governance.
Highlights
Corporate governance codes are formal documents based on fundamental norms of justice, fairness and equality (Zattoni and Cuomo 2008) that outline recommendations to improve governance and increase the accountability of companies to shareholders (Hermes et al 2007; Aguilera and Cuervo-Cazura 2009; Krenn 2015)
Drawing upon neo-institutional theory as the perspective for research on corporate governance, we present the results of empirical studies on compliance with best practice codes
Following the frameworks offered by Oliver (1991), Seidl et al (2013), Shrives and Brennan (2015) and Thanasas et al (2018), we address questions on how companies respond to the institutional change brought by corporate governance codes, analyzing both compliance statements and explanations of deviation from best practice (Hooghiemstra 2012)
Summary
Corporate governance codes are formal documents based on fundamental norms of justice, fairness and equality (Zattoni and Cuomo 2008) that outline recommendations to improve governance and increase the accountability of companies to shareholders (Hermes et al 2007; Aguilera and Cuervo-Cazura 2009; Krenn 2015). Such codes have become an increasingly important element of the business environment and are viewed as a systemic response to governance inefficiencies. Studies suggest that the positive outcomes anticipated from adoption of corporate governance codes may be limited by the phenomena of instrumental box ticking (Fotaki et al 2020), decoupling (Martin 2010; Krenn 2015), substitution response (Okhmatovskiy and David 2012) or overstatement of compliance (Sobhan 2016)
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