Quality of non-compliance explanations related to corporate governance codes. Compliance with Corporate Governance Codes: differences between the Netherlands and Germany

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This research takes a closer look at compliance to corporate governance codes in the Netherlands and in Germany. Compliance is measured by the number of deviations from the corporate governance code, and also by how well these deviations are explained. This research finds that explanations are not of the level that the corporate governance code demands. With respect to the number of deviations, this research finds that shareholders seem to care more for comply-or-perform than for comply-or-explain. Furthermore, it is found that the presence of more women on the supervisory board plays a significant role in increasing compliance, whereas bigger supervisory boards are found to decrease a firm’s compliance. A striking finding is that the executive board seems to play no role in determining compliance. Many differences between the Netherlands and Germany can be explained by making a distinction between the market-based funding in the Netherlands, and the bank-based funding in Germany, which has far reaching consequences for the corporate governance and its functioning in the two different countries. Lastly, it is found that the German corporate governance code is less efficient, because it is oriented towards market-oriented governance mechanisms, which only play a minor role in Germany
Faculteit der Managementwetenschappen