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The Corporate Governance Code and Compliance by Maltese Listed Companies

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  • Peter J Baldacchino
  • Claire Vella
  • Simon Grima

Abstract

Purpose: In this paper we lay out the evaluation of non-compliance with the Code of Principles of Good Corporate Governance and the analyses of the adequacy of the explanations provided thereof, including the overall effectiveness of the existing regulatory framework. Design/methodology/approach: To achieve the objectives of this study, a review of the non-compliance section of the corporate governance statements of each Maltese listed company was carried out for the years 2012, 2014 and 2016. Furthermore, 13 semi-structured interviews were held. Findings: The paper finds that a general insufficiency in the explanations provided for non-compliance exists. Some entities give only lip service to the provisions of the Code as they fail to realise the benefits an entity may reap from having good corporate governance structures in place. There is a lack of education and awareness in this regard, and not only on the part of companies but also on the part of shareholders who seem to make minimal use of the information provided in the corporate governance statements. Practical implications: The study raises awareness of the need of improving corporate governance practices, as well as education on corporate governance, across Maltese listed companies. It is hoped that the recommendations made may encourage entities to improve in their reporting and the regulator to provide further guidance to entities to do so. Originality/value: Prior to the amendment of existing rules, increased enforcement of the current regulatory framework and monitoring by the regulator is required. The study highlights the misconceptions on the auditor’s role in corporate governance.

Suggested Citation

  • Peter J Baldacchino & Claire Vella & Simon Grima, 2019. "The Corporate Governance Code and Compliance by Maltese Listed Companies," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 71-90.
    • Handle: RePEc:ers:ijebaa:v:vii:y:2019:i:2:p:71-90
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    References listed on IDEAS

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    1. Dirk Akkermans & Hans Van Ees & Niels Hermes & Reggy Hooghiemstra & Gerwin Van der Laan & Theo Postma & Arjen Van Witteloostuijn, 2007. "Corporate Governance in the Netherlands: an overview of the application of the Tabaksblat Code in 2004," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1106-1118, November.
    2. David Seidl & Paul Sanderson & John Roberts, 2009. "Applying 'Comply-or-Explain': Conformance with Codes of Corporate Governance in the UK and Germany," Working Papers wp389, Centre for Business Research, University of Cambridge.
    3. 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.
    4. Shrives, Philip J. & Brennan, Niamh M., 2015. "A typology for exploring the quality of explanations for non-compliance with UK corporate governance regulations," The British Accounting Review, Elsevier, vol. 47(1), pages 85-99.
    5. Simon Grima & Sharon Seychell & Frank H. Bezzina, 2017. "Investigating Factors Predicting Derivative Mishandling: A Sociological Perspective," European Research Studies Journal, European Research Studies Journal, vol. 0(4A), pages 3-17.
    6. Eleni N. Giannakopoulou & Eleftherios I. Thalassinos & Theodoros V. Stamatopoulos, 2016. "Corporate governance in shipping: an overview," Maritime Policy & Management, Taylor & Francis Journals, vol. 43(1), pages 19-38, January.
    7. David Seidl & Paul Sanderson & John Roberts, 2013. "Applying the ‘comply-or-explain’ principle: discursive legitimacy tactics with regard to codes of corporate governance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(3), pages 791-826, August.
    8. Baldacchino, Peter J. & Gatt, Jessica & Tabone, Norbert & Bezzina, Frank, 2018. "The Nomination Committee in Maltese Listed Companies," 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disruptive Change (Dubrovnik, 2018), in: 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disrupt, pages 125-139, Governance Research and Development Centre (CIRU), Zagreb.
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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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