Patterns of Compliance with the German Corporate Governance Code

19 Pages Posted: 2 Oct 2008

See all articles by Till Talaulicar

Till Talaulicar

University of Erfurt

Axel V. Werder

Technical University of Berlin, Department of Organization and General Management

Abstract

This study provides evidence to practitioners and policy makers that firms can be classified regarding their compliance with the code recommendations. In-depth analyses of the identified patterns of compliance furthermore reveal that some patterns may indicate less well substantiated deviations from the code and partly even decouplings of the declared compliance practices. The identified cluster solution does not merely reflect the number of rejected code recommendations. Rather, companies with very similar rates of overall compliance with the GCGC are assigned to different clusters because they feature, at the same time, different patterns of code conformity. These findings imply that governance prediction and governance performance studies have to overcome overly aggregated measures of code compliance which only incorporate the number of rejected code recommendations. Based on seven dimensions of code compliance, cluster analysis is used to identify discrete groups of companies with similar patterns of code observance. We determine eight patterns of compliance which are characterized by distinct forms of code conformity. This study investigates whether the form of compliance with the recommendations of the German Corporate Governance Code (GCGC) appears to be idiosyncratic to a specific company or features similarities across firms. The major aim of this research is thus to explore the ability of a classification of compliance patterns to account for the similarities and differences between firms regarding their conformity with the GCGC.

Suggested Citation

Talaulicar, Till and Werder, Axel v., Patterns of Compliance with the German Corporate Governance Code. Corporate Governance: An International Review, Vol. 16, Issue 4, pp. 255-273, July 2008, Available at SSRN: https://ssrn.com/abstract=1276706 or http://dx.doi.org/10.1111/j.1467-8683.2008.00696.x

Till Talaulicar (Contact Author)

University of Erfurt ( email )

Internationales Buro
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Axel v. Werder

Technical University of Berlin, Department of Organization and General Management ( email )

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Berlin, D-10623
Germany
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