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Corporate governance influencing compliance with the Swedish Code of Corporate Governance

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Abstract

A code of corporate governance was introduced in Sweden in 2005. Although the code is mandatory, a company is allowed to override specific rules if it openly discloses the deviation and explains why it does not comply. The aim of this study is to explain how the governance structure, operationalized as the ownership structure, the board and the auditor, affects companies’ propensity to deviate from the Swedish Code. The empirical data in this study are based on the 2010 annual reports from 193 companies listed on the Stockholm Stock Exchange and data from the Swedish Corporate Governance Board. The findings show that concentrated ownership, smaller boards with directors with long tenure and audit firms with a high proportion of employees compared with partners increase the likelihood of deviance.

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Acknowledgements

The author appreciates comments on an earlier draft of this article from participants at the American Accounting Association Annual Meeting, 2011 in Denver, Colorado. The article has also benefited from constructive comments and criticism from the editor and anonymous reviewers. The study would not have been feasible without the help on data access from the Swedish Corporate Governance Board and funding from the Torsten Söderberg Foundation.

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  1. Department of Management and Engineering, Linköping University, Linköping, SE-581 83, Sweden

    Torbjörn Tagesson

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  1. Torbjörn Tagesson
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  2. Sven-Olof Yrjö Collin
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Correspondence to Torbjörn Tagesson.

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Tagesson, T., Collin, SO. Corporate governance influencing compliance with the Swedish Code of Corporate Governance. Int J Discl Gov 13, 262–277 (2016). https://doi.org/10.1057/jdg.2015.15

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