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Corporate governance in the UK: Is the comply or explain approach working?

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  • Arcot, Sridhar
  • Bruno, Valentina
  • Faure-Grimaud, Antoine

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 of 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 the greatest possible benefits.

Suggested Citation

  • Arcot, Sridhar & Bruno, Valentina & Faure-Grimaud, Antoine, 2010. "Corporate governance in the UK: Is the comply or explain approach working?," International Review of Law and Economics, Elsevier, vol. 30(2), pages 193-201, June.
    • Handle: RePEc:eee:irlaec:v:30:y:2010:i:2:p:193-201
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    4. Boone, Audra L. & Casares Field, Laura & Karpoff, Jonathan M. & Raheja, Charu G., 2007. "The determinants of corporate board size and composition: An empirical analysis," Journal of Financial Economics, Elsevier, vol. 85(1), pages 66-101, July.
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    More about this item

    Keywords

    Corporate governance Comply or explain Combined Code;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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