Abstract
The aim of this paper is to identify some clusters of companies which represent and classify different forms of compliance with soft regulation and the comply-or-explain principle. The analysis was conducted through the administration of a structured questionnaire to a sample of compliance officers from 102 companies listed on the Italian stock market. Our results identify three different clusters of companies with different patterns of compliance characterised by distinct forms of regulation conformity. The first cluster of companies called “regulation adherents” favour a clear and explicit application of compliance, the second cluster called “regulation dissenters” favour the “explain” principle and show compliance values below the sample average, while the third cluster called “regulation dissenters with balanced task orientation and an independent supervisory unit” fall between the first two clusters. Our study gives a contribution to corporate governance literature, with the aim of contributing to both the studies focused on the measurement of code compliance and the studies focused on identification of different patterns of code conformity. This paper extends the literature related to compliance and makes a relevant step towards the identification of principles and practices related to an innovative and unique application of the anti-corruption system based on the comply-or-explain principle.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Aguilera, R., and A. Cuervo-Cazurra. 2004. Codes of good governance worldwide: What is the trigger? Organization Studies 25: 415–444. https://doi.org/10.1177/0170840604040669.
Aguilera, R.V., and A. Cuervo-Cazurra. 2009. Codes of good governance. Corporate Governance: An International Review 17: 376–387. https://doi.org/10.2139/ssrn.1773090.
Aguilera, R.V., I. Filatotchev, H. Gospel, and G. Jackson. 2008. An organizational approach to comparative corporate governance: Costs, contingencies, and complementarities. Organization Science 19(3): 475–492. https://doi.org/10.2139/ssrn.955043.
Akkermans, D.H.M., H. Van Ees, C.L.M. Hermes, R.B.H. Hooghiemstra, G. Van der Laan, T.J.B.M. Postma, and A. Van Witteloostuijn. 2007. Corporate governance in the Netherlands: An overview of the application of the Tabaksblat Code in 2004. Corporate Governance: An International Review 15: 1106–1118. https://doi.org/10.1111/j.1467-8683.2007.00634.x.
Altman, A. 2001. Arguing about law (2nd ed.). Belmont: Wadsworth Publishing Company.
Arthur, J., & Shaw, W. 2006. Readings in the philosophy of law (4th ed.). Upper Saddle River: Prentice-Hall.
Berglöf, E., and A. Pajuste. 2005. What do firms disclose and why? Enforcing corporate governance and transparency in Central and Eastern Europe. Oxford Review of Economic Policy 21: 178–197.
Brick, I.E., and N.K. Chidambaran. 2010. Board meetings, committee structure, and firm value. Journal of Corporate Finance 16(4): 533–553. https://doi.org/10.1016/j.jcorpfin.2010.06.003.
Cotton, P., I. Fraser, and W.Y. Hill. 2000. The social audit agenda—Primary health care in stakeholder society. International Journal of Auditing 4(1): 3–28. https://doi.org/10.1006/cpac.2000.0436.
Dedman, E. 2000. An investigation into the determinants of UK board structure before and after Cadbury. Corporate Governance: An International Review 8: 133–153. https://doi.org/10.1111/1467-8683.00191.
Fernández-Rodríguez, E., S. Gómez-Ansón, and A. Cuervo-García. 2004. The stock market reaction to the introduction of best practices codes by Spanish firms. Corporate Governance: An International Review 12: 29–46. https://doi.org/10.1111/j.1467-8683.2004.00341.x.
Goncharov, I., J.R. Werner, and J. Zimmermann. 2006. Does compliance with the German Corporate Governance Code have an impact on stock valuation? An empirical analysis. Corporate Governance: An International Review 14: 432–445. https://doi.org/10.1111/j.1467-8683.2006.00516.x.
Goodwin-Stewart, J., and P. Kent. 2006. Relation between external audit fees, audit committee characteristics and internal audit. Accounting and Finance 46(3): 387–404. https://doi.org/10.1111/j.1467-629X.2006.00174.x.
Guest, P.M. 2008. The determinants of board size and composition: Evidence from the UK. Journal of Corporate Finance 14(1): 51–72. https://doi.org/10.12691/jfa-2-4-2.
Haines, F. 1997. Corporate regulation: Beyond punish or persuade?. Oxford: Clarendon Press.
Haxhi, I., & Van Ees, H. 2010. Explaining diversity in the worldwide diffusion of codes of good governance. Journal of International Business Studies 41: 710–726.
Johansen, K., S. Laser, D. Neuberger, and E. Andreani. 2014. Inside or outside control of banks? Evidence from the composition of supervisory boards. European Journal of Law and Economics. https://doi.org/10.1007/s10657-014-9463-y.
Jokipii, A. 2010. Determinants and consequences of internal control in firms: A contingency theory based analysis. Journal of Management and Governance 14(2): 115–144. https://doi.org/10.1007/s10997-009-9085-x.
Pass, C. 2006. The revised Combined Code and corporate governance. An empirical survey of 50 large UK companies. Managerial Law 48(5): 467–478. https://doi.org/10.1108/03090550610715963.
Peterson, E.A. 2013. Compliance and ethics programs: Competitive advantage through the law. Journal of Management and Governance 17(4): 1027–1045. https://doi.org/10.1007/s10997-012-9212-y.
Previtali, P., and P. Cerchiello. 2017. Structuring supervisory board for an anti-corruption strategy: a new application of a compliance system. Corporate Governance: The International Journal of Business in Society 17(1): 48–63. https://doi.org/10.1108/CG-09-2015-0126.
Rose, C. 2015. Listed firm’s level of stakeholder transparency—The comply or explain evidence from the Danish corporate governance code. International Journal of Business Science and Applied Management 10(2): 1–15.
Rose, C. 2016. Firm performance and comply or explain disclosure in corporate governance. European Management Journal 34(3): 202–222. https://doi.org/10.1016/j.emj.2016.03.003.
Seidl, D., P. Sanderson, and J. Roberts. 2013. Applying the “comply-or-explain principle: Discursive legitimacy tactics with regard to codes of corporate governance. Journal of Management and Governance 17: 791–826. https://doi.org/10.1007/s10997-011-9209-y.
Talaulicar, T., and A.V. Werder. 2008. Patterns of compliance with the German corporate governance code. Corporate Governance: An International Review 16(4): 255–273. https://doi.org/10.1111/j.1467-8683.2008.00696.x.
Upadhyay, A.D., R. Bhargava, and S.D. Faircloth. 2013. Board structure and role of monitoring committees. Journal of Business Research 67(7): 1486–1492. https://doi.org/10.1016/j.jbusres.2013.07.017.
Vafeas, N. 1999. Board meeting frequency and firm performance. Journal of Financial Economics 53(1): 113–142. https://doi.org/10.1016/S0304-405X(99)00018-5.
Werder, A.V., T. Talaulicar, and G.L. Kolat. 2005. Compliance with the German Corporate Governance Code: An empirical analysis of the compliance statements by German listed companies. Corporate Governance: An International Review 13: 178–187. https://doi.org/10.1111/j.1467-8683.2005.00416.x.
Werder, A.V., and T. Talaulicar. 2006. Corporate governance developments in Germany. In Handbook on international corporate governance: Country analyses, ed. C.A. Mallin, 28–44. Cheltenham: Edward Elgar.
Walker, C. 2014. Organizational learning: the role of third party auditors in building compliance and enforcement capability. International Journal of Auditing 22(2): 213–222. https://doi.org/10.1111/ijau.12026.
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Appendix
Rights and permissions
About this article
Cite this article
Previtali, P., Cerchiello, P. Patterns of compliance with soft regulation in Italian listed companies. Int J Discl Gov 16, 37–46 (2019). https://doi.org/10.1057/s41310-019-00055-z
Received:
Published:
Issue Date:
DOI: https://doi.org/10.1057/s41310-019-00055-z