Corporate Governance in the UK: Is the Comply or Explain Approach Working?

31 Pages Posted: 7 Jan 2010 Last revised: 26 Jan 2010

See all articles by Sridhar Arcot

Sridhar Arcot

ESSEC Business School - Finance Department

Valentina Bruno

American University - Department of Finance and Real Estate

Antoine Faure-Grimaud

London School of Economics; Centre for Economic Policy Research (CEPR)

Date Written: July 1, 2009

Abstract

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

Arcot, Sridhar and Bruno, Valentina Giulia and Faure-Grimaud, Antoine, Corporate Governance in the UK: Is the Comply or Explain Approach Working? (July 1, 2009). International Review of Law and Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1532290

Sridhar Arcot (Contact Author)

ESSEC Business School - Finance Department ( email )

Avenue Bernard Hirsch
BP 105 Cergy Cedex, 95021
France

Valentina Giulia Bruno

American University - Department of Finance and Real Estate ( email )

Kogod School of Business
4400 Massachusetts Ave., N.W.
Washington, DC 20016-8044
United States

HOME PAGE: http://www.american.edu/kogod/faculty/bruno.cfm

Antoine Faure-Grimaud

London School of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 6041 (Phone)
+44 20 7955 6887 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
1,724
rank
9,044
Abstract Views
6,576
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information