Implementation of the Recommendations and Suggestions of the German Corporate Governance Code: An Empirical Survey of the DAX, MDAX and SDAX Companies
Corporate Governance Report 2006, pp. 181-190, 2006
Posted: 25 Apr 2007
The Berlin Center of Corporate Governance surveyed all companies listed on the Frankfurt Stock Exchange to systematically record the acceptance of the German Corporate Governance Code. Based on the current version of the Code, a questionnaire was developed in which companies were asked to indicate for each individual recommendation and suggestion whether they already comply with the relevant rule, intend to do so this year or do not apply the rule. The Code as amended on June 2, 2005 contains 82 recommendations and 19 suggestions. In total, 200 useable questionnaires were returned. The present article focuses on the DAX, MDAX and SDAX indices and is based on the answers of 84 companies (28 DAX, 36 MDAX and 20 SDAX companies).
The study shows that the German Corporate Governance Code as a whole continues to enjoy high acceptance. As expected, acceptance varies between recommendations and suggestions. As in previous years, it is also clear that acceptance tends to increase with the size of the company. Thus the comparatively small number of recommendations identified by the survey which will not be followed by the majority of companies now or in the future related to the SDAX segment only.
Before the end of the year a relatively pronounced increase is expected in the implementation of the Code's new recommendations concerning elections to the supervisory board. While at the time of the survey the majority of these new recommendations were classed as critical in all the indices surveyed, by the end of the year no more than two of these recommendations will be implemented by fewer than 90% of companies. Worthy of particular mention in this context is the finding that only in the DAX do around a quarter of companies not intend, now or in the future, to accept the recommendation that it should not be the rule for the former management board chairman or a management board member to become supervisory board chairman or the chairman of a supervisory board committee. In the MDAX and SDAX, on the other hand, over 90% of the companies will meet this recommendation.
Keywords: Compliance, Corporate governance, Disclosure, German Corporate Governance Code, Statement of conformity, Transparency
JEL Classification: G30, G34
Suggested Citation: Suggested Citation