From London to the Continent: Rethinking Governance Codes in Europe’s Corporate Landscape

Bocconi Legal Studies Research Paper No. 4269661

European Company and Financial Law Review, 2024, forthcoming

32 Pages Posted: 15 Nov 2022 Last revised: 11 Apr 2024

See all articles by Piergaetano Marchetti

Piergaetano Marchetti

Bocconi University - Department of Law

Maria Lucia Passador

Bocconi University - Department of Law; Harvard University - Harvard Law School; European Banking Institute

Date Written: November 6, 2022

Abstract

This paper critically evaluates the arguments proposed by Cheffins and Reddy in their recent article, advocating for the abolition of the UK Corporate Governance Code with the promise of substantial benefits to the market. The exploration primarily delves into the potential ramifications of such a proposal on other European jurisdictions, where Codes of corporate governance hold significant sway in the corporate domain, reflecting a spectrum of legal and cultural traditions. While the article under scrutiny is geographically confined to the United Kingdom, the ramifications of such a proposal extend far beyond, resonating deeply with the pervasive influence of the UK Code of Corporate Governance even within continental Europe, urging a comprehensive examination.
The analysis begins by revisiting the arguments advanced by the authors and scrutinizing them in light of the Continental European context. This examination reveals several concerns that necessitate attention. We contend that despite geographic limitations, the Code serves as a valuable and adaptable instrument for fostering accountability, transparency, and innovation in markets transcending borders and jurisdictions. Its continued relevance is underscored by its utility in addressing emergent issues and governance challenges, particularly in the realm of ESG and auditing. Consequently, the proposition of its abolition carries significant drawbacks for both companies and investors alike.
In conclusion, we assert that European jurisdictions should not dismiss Codes of corporate governance outright, but rather advocate for their refinement and adaptation to the evolving imperatives of the globalized economy. Such an approach is deemed imperative to maintain and enhance corporate governance standards, thereby ensuring the continued integrity and efficiency of European markets.

Keywords: Corporate Governance Codes, Cadbury Code, ESG, Stakeholders, Soft law

JEL Classification: G18, G30, G34, G38, K22

Suggested Citation

Marchetti, Piergaetano and Passador, Maria Lucia, From London to the Continent: Rethinking Governance Codes in Europe’s Corporate Landscape (November 6, 2022). Bocconi Legal Studies Research Paper No. 4269661, European Company and Financial Law Review, 2024, forthcoming, Available at SSRN: https://ssrn.com/abstract=4269661 or http://dx.doi.org/10.2139/ssrn.4269661

Piergaetano Marchetti

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, Milan 20136
Italy

Maria Lucia Passador (Contact Author)

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, Milan 20136
Italy

Harvard University - Harvard Law School ( email )

1563 Massachusetts Avenue
Cambridge, MA 02138
United States

European Banking Institute ( email )

Frankfurt
Germany

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