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More than two decades after the Cadbury Report: How far has Sweden, as role model for corporate-governance practices, come?

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Abstract

The purpose of this study is to follow up on the ‘comply-or-explain’ principle more than two decades after the Cadbury Report was published. We investigate the rate of compliance and quality of explanations provided in case of non-compliance in the context of Sweden. This country has been pointed out as a role model for corporate-governance practices. The empirical study comprises the 241 companies listed on Nasdaq OMX Stockholm in 2014. We analyze the quality of the explanations in the light of the Swedish Corporate Governance Code. Our findings confirm that the comply-or-explain principle in Sweden is effective. Around half of the companies use the possibility to deviate from the Code. A clear majority of the explanations, 71.8%, are informative. This study provides insights for academic scholars and policy-makers alike how the comply-or-explain principle works in a country that is viewed as a role model for how corporate governance should be implemented. In addition, the high-quality explanations provided by listed companies on Nasdaq OMX Stockholm can serve as an inspiration for other listed companies in European countries, thereby outlining a contribution to business practice.

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Notes

  1. Chapter (1) The shareholders’ meeting, (2) Nomination committee, (3) The tasks of the board of directors, (4) The size and composition of the board, (5) The tasks of the director, (6) The chair of the board, (7) Board procedures, (8) Evaluation of the board of directors and the chief executive officer, (9) Remuneration of the board and executive management, (10) Information on corporate governance.

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Correspondence to Leona Achtenhagen.

Appendix: Deviations from each provision

Appendix: Deviations from each provision

Code provision

Number of deviations

Percentage of total deviations (%)

2.4

Composition of nomination committee

41

26.3

7.3

Audit committee

14

9.0

2.1

Establishment of a nomination committee

12

7.7

9.8

Share-based incentive programs

12

7.7

9.2

Remuneration committee members

11

7.1

2.3

Nomination committee independence

9

5.8

7.6

Audit of 6- or 9-month report

8

5.1

2.5

Announcement of nomination committee

7

4.5

1.5

Language of shareholder meeting

6

3.8

4.2

Deputy directors

5

3.2

7.4

Internal control function

5

3.2

4.4

Director independence toward company

4

2.6

2.6

Proposal of new board members

3

1.9

4.3

Combined board and executive membership

3

1.9

1.1

Time and venue of shareholder meeting

2

1.3

7.5

Meeting with statutory auditor

2

1.3

9.1

Establishment of an audit committee

2

1.3

1.3

Annual general meeting attendance

1

0.6

1.7

Minutes from annual general meeting

1

0.6

2.2

Appointments of nomination committee members

1

0.6

4.1

Board composition

1

0.6

4.5

Director independence toward shareholders

1

0.6

6.1

Election of board chairman

1

0.6

8.2

Evaluation of chief executive officer

1

0.6

9.4

Predetermined criteria on variable pay

1

0.6

9.5

Predetermined limits on variable pay

1

0.6

9.9

Severance pay

1

0.6

Total

 

156

100.0

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Achtenhagen, L., Inwinkl, P., Björktorp, J. et al. More than two decades after the Cadbury Report: How far has Sweden, as role model for corporate-governance practices, come?. Int J Discl Gov 15, 235–251 (2018). https://doi.org/10.1057/s41310-018-0051-1

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  • DOI: https://doi.org/10.1057/s41310-018-0051-1

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