Journal of Management & Governance

, Volume 19, Issue 2, pp 259–284 | Cite as

Importance of core values of ethics, integrity and accountability in the European corporate governance codes

Article

Abstract

This paper examines the importance attached to core values of ethics, integrity and accountability in the European codes and regulations of corporate governance. The study raises the following critical question: does a gap exist between what the public expects or needs and what institutional and regulatory bodies have underlined in the codes and regulations of corporate governance? The present study aims to analyze the recent laws, regulations and codes of corporate governance introduced by the European Commission and in five major European countries (France, Germany, Italy, the Netherlands and the United Kingdom) before and after 2002. The major objective is to examine the extent to which the European codes and regulations, particularly those issued after 2002 and 2007, have considered several important topics such as ethics and corporate behavior, shareholder rights, and board accountability. The analyses show that there are severe shortcomings in the European corporate governance codes regarding the importance given to ethical values, integrity of management, and accountability mechanisms.

Keywords

European directives Corporate governance code Content analysis Ethics Accountability Financial crisis 

References

  1. AFEP (Association Française des Entreprises Privées)—MEDEF (Mouvement des Entreprises de France). (2010). Corporate governance of listed corporations, April. p 46.Google Scholar
  2. Armstrong, C. S., Jagolinzer, A. D., & Larcker, D. F. (2010). Chief executive officer equity incentives and accounting irregularities. Journal of Accounting Research, 48(2), 225–271.CrossRefGoogle Scholar
  3. Ball, R., Kothari S. P., & Ashok. R. (1999) The effects of international institutional factors on properties of accounting earnings. Working paper. University of Rochester.Google Scholar
  4. Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees. (1999). Report and recommendations of the Blue Ribbon Committee on improving the effectiveness of corporate audit committees, New York Stock Exchange and the National Association Securities Dealers.Google Scholar
  5. Borsa Italiana. (1999). Committee for the Corporate Governance of Listed Companies, (Italian) report & code of conduct (the Preda Code).Google Scholar
  6. Borsa Italiana. (2002). Committee for the Corporate Governance of Listed Companies, Italian corporate governance code (il Codice di Autodisciplina delle società quotate rivisitato).Google Scholar
  7. Borsa Italiana. (2006). Codice di Autodisciplina- The Code of conduct for listed companies in Italy ‘Preda Report’.Google Scholar
  8. Collier, P., & Zaman, M. (2005). Convergence in European corporate governance: the audit committee concept. Corporate Governance: An International Review, 13(6), 753–768.CrossRefGoogle Scholar
  9. Commissione Di Studio, Relazione. (2002). Final Report, 2 September.Google Scholar
  10. Committee of Sponsoring Organizations of the Treadway Commission (COSO). (2004). Recommendation for the public company, chapter 2.Google Scholar
  11. European Commission. (2003a). Modernizing company law and enhancing corporate governance in the European UnionA plan to move forward, Communication from the Commission to the Council and the European Parliament, COM/2003/0284 final.Google Scholar
  12. European Commission. (2003b). Communication from the Commission to the Council and the European Parliament—Reinforcing the statutory audit in the EU Com No 286 final.Google Scholar
  13. European Commission. (2005). Recommendation (2005/162/EC), on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board.Google Scholar
  14. European Commission. (2006). Directive 2006/46/EC of the European Parliament and of the Council of 14 June 2006 on the annual and consolidated accounts.Google Scholar
  15. European Commission. (2009a). Commission Recommendation 2009/385/EC of 30 April 2009 complementing recommendations 2004/913/EC and 2005/162/EC as regards the regime for the remuneration of directors of listed companies (OJ L 120, 15.5.2009, pp. 28–31).Google Scholar
  16. European Commission. (2009b). Study on monitoring and enforcement practice in corporate governance in the member states. Study conducted by RiskMetrics Group, Business Europe, EcoDa, and Landwell & Associés, pp. 199.Google Scholar
  17. European Commission. (2010). Feedback Statement—Summary of responses to the Commission Green Paper on corporate governance in financial institutions, COM(2010) 284, accessible at http://ec.europa.eu/internal_market/consultations/docs/2010/governance/feedback_statement.
  18. European Commission. (2011). Green Paper-the EU corporate governance framework (COM: 2011) 164 final, pp. 24.Google Scholar
  19. Feng, M., Weili, G., Luo, S., & Shevlin, T. (2011). Why do CFOs become involved in material accounting manipulations. Journal of Accounting and Economics, 51, 21–36.CrossRefGoogle Scholar
  20. Financial Reporting Council (FRC). (2003). The Combined code on corporate governance July.Google Scholar
  21. Financial Reporting Council (FRC). (2010). The UK Corporate Governance Code. June. pp. 36.Google Scholar
  22. French Senate. (2003). Loi de Sécurité Financière, March 20.Google Scholar
  23. Government Commission. (2010). German Corporate Governance Code amended, May. pp. 15.Google Scholar
  24. Grove, H., & Basilico, E. (2008). Fraudulent financial reporting detection. International Studies of Management and Organization (Vol. 38, No. 3, Fall, pp. 10–42).Google Scholar
  25. International Corporate Governance Network (ICGN). (2009). Second statement on the global financial crisis, March, pp. 6.Google Scholar
  26. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1998). Law and finance. Journal of Political Economy, 106, 1113–1155.CrossRefGoogle Scholar
  27. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (2000). Investors protection and corporate governance. Journal of Financial Economics, 58(1–2), 3–27.CrossRefGoogle Scholar
  28. Mintz, S. M. (2005). Corporate governance in an international context: legal systems, financing patterns and cultural variables. An International Review, 13(5), 582–597.Google Scholar
  29. Nasdaq Stock Market Inc. (Nasdaq). (2002). Summary of NASDAQ corporate governance proposals, September.Google Scholar
  30. Norton Rose Group (2003).The Higgs Reports: views of the role and effectiveness of non-executive, January, pp. 31.Google Scholar
  31. Nowland, J. (2008). The effect of national governance codes on firm disclosure practices: evidence from analyst earnings forecasts. Corporate Governance: An International Review, 16(6), 475–491.CrossRefGoogle Scholar
  32. NYSE Listed Company Manual. (2002a). Corporate governance rule proposals—Reflecting recommendations from the NYSE corporate governance accountability and listing standards committee, August.Google Scholar
  33. NYSE Listed Company Manual. (2002b). New York stock exchange.Google Scholar
  34. Organization for Economic Co-Operation and Development (OECD). (2009). Corporate governance and the financial crisis: Key findings and main messages. June 17, pp. 59.Google Scholar
  35. Renders, A., Gaermynck, A., & Sercu, P. (2010). Corporate-governance rating and company performance: across European study. Corporate Governance: An International Review, 18(2), 87–106.CrossRefGoogle Scholar
  36. Rockness, H., & Rockness, J. (2005). Legislated ethics: From Enron to Sarbanes-Oxley, the impact on Corporate America. Journal of Business Ethics, 57, 31–54.CrossRefGoogle Scholar
  37. Sheridan, L., Jones, E., & Marston, C. (2006). Corporate governance codes and the supply of corporate information in the UK. Corporate Governance: An International Review, 14(5), 497–503.CrossRefGoogle Scholar
  38. Smith Group. (2003). Audit committees: Combined code guidance, July.Google Scholar
  39. Soltani, B. (2005). Factors affecting corporate governance and audit committees in selected countries (France, Germany, the Netherlands, the United Kingdom and the United States) (p. 200). USA: The Institute of Internal Auditors Research Foundation.Google Scholar
  40. Tabaksblat Committee. (2003). The Dutch corporate governance code, December.Google Scholar
  41. Tabaksblat Committee. (2008). The Dutch corporate governance code, December.Google Scholar
  42. The Institute of Chartered Accountants in England and Wales (ICAEW) (Turnbull Report). (1999). Internal control: guidance for directors on the Combined Code, September.Google Scholar
  43. The NASDAQ Stock Market Inc. (NASDAQ). (2002). Summary of NASDAQ corporate governance proposals, September.Google Scholar
  44. The United States Congress. (2010). The Dodd-Frank Wall Street reform and consumer protection Act, http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf.
  45. The Treadway Commission (National Commission on Fraudulent Financial Reporting. (1987). Report of the National Commission on fraudulent financial reporting, Washington, DC.Google Scholar
  46. The United States Senate and House of Representatives. (2002). Sarbanes-Oxley Act, July.Google Scholar
  47. Vander Bauwhede, H., & Willekens, M. (2008). Disclosure on corporate governance in the European Union. Corporate Governance: An International Review, 16(2), 101–115.CrossRefGoogle Scholar
  48. Weil, Gotshal & Manges LLP. (2002a). Comparative study of corporate governance codes relevant to the European Union and its member states.Google Scholar
  49. Weil, Gotshal & Manges LLP. (2002b). Discussion of individual corporate governance codes relevant to the European Union and its member states, Annex IV (January) pp.311.Google Scholar
  50. Winter Group. (2002) Report of the high level group of company law experts on a modern regulatory framework for company law in Europe, Brussels.Google Scholar

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.University of Paris 1 SorbonneParisFrance
  2. 2.European Business SchoolParisFrance

Personalised recommendations