International Journal of Business Administration
Vol. 4, No. 6; 2013
Good Practices in Corporate Governance: One-Size-Fits-All vs. Comply-or-Explain
Corporate Governance, International Business School, Chiprovtzi 7 – 1303 Sofia, Bulgaria
Correspondence: Miroslav Nedelchev, Associate Professor in Corporate Governance, International Business School, Chiprovtzi 7 – 1303 Sofia, Bulgaria. Tel: 359-2-400-1620. E-mail: firstname.lastname@example.org Received: August 22, 2013
Accepted: September 30, 2013
Online Published: November 8, 2013
There are many studies exploring the effects of hard and soft legislation on good practices. Few studies examine the strengths and weaknesses of particular legislation. These mainly focus on positive results of legislation and justify the application of existing approach for better practices.
The study compares the approaches of hard and soft legislation. It finds that both approaches are suitable for implementation despite of state policy. The analysis is developed by using the practices of several countries for latest 20 years.
This study explored national legislation and its effects on good practices in corporate governance. It revealed that there was no significant difference between state policy and approaches, and between legislation and corporate governance practices.
The objective of the study is to develop deeper insight into pros and cons adoptation of approaches. Comparative analysis shows that state policy determines the good practices. Moreover, the conclusion point out that there is a small freedom of action for companies to attract investors.
Keywords: good practices, corporate governance
More and more frequently, researchers explain the roots of modern crisis and proposals for recovery. Policy makers search balance among competitive power of national economy and international agreements for economic growth of world economy. Managers fulfil their fiduciary engagements to shareholders taking in mind the social engagements to stakeholders. Investors dispose the capital among companies and judge the quality of corporate governance practices.
Studies to date have analysed the corporate governance practices in their own legal environment only. The state policy defines a frame for good practices and discourages companies for innovative practices. Self-regulated organizations and non-government entities extend horizons by adoptation of a new approach. Present study compares the two most popular approaches for good practices in corporate governance. The pioneer analysis has a target to describe and contradict both approaches than to assess and improve them. In order to understand which approach better meets investor’s need, we will use evolutionist and comparative methods. Good practices in corporate governance are a part of the economic policy for investors attracting. Changes of good practices are an indicator for globalisation and harmonisation reforms. Part of these reforms is becoming of close the different systems of corporate governance.
Discovery of balance between legal and regulation instruments together with codes and initiatives is the base for state policy in corporate governance issues. The modern theory confirms the acceptation of voluntary codes as preferred variant for decrease of regulation costs and increase of market flexibility. The practice for implementation of unified criteria and legal requirements, familiar as one-size-fits-all approach, was replace by a new approach – comply-or-explain.
Published by Sciedu Press
International Journal of Business Administration
Vol. 4, No. 6; 2013
After a consecution of wrong actions by local companies (BCCI, Maxwell, etc.), in 1992 UK introduced a new practice for corporate...
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