Corporate Governance in the UK: Is the Comply or Explain Approach Working?
31 Pages Posted: 7 Jan 2010 Last revised: 26 Jan 2010
Date Written: July 1, 2009
We examine the effectiveness of the "Comply or Explain" approach to corporate governance in the UK. Using a unique database of 245 non-financial companies for the period 1998-2004, we find an increasing trend of compliance with the Combined Code, but a frequent use of standard explanations in case of non-compliance. We show how the Combined Code has been interpreted and applied, and we discuss the existence of enforcement and monitoring problems. We make recommendations so that the approach could be strengthened with greatest possible benefits.
Keywords: Corporate Governance, Comply or Explain, Combined Code
JEL Classification: K22, G34
Suggested Citation: Suggested Citation