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Abstract

The EU Member States exhibit a rich diversity in corporate governance practices, structures, and participants, reflecting differences in culture, traditional financing options and corporate ownership concentration patterns, and legal origins and
frameworks. This rich diversity complicates corporate governance comparisons between nations. Nonetheless, the codes that have been issued in the Member States in the last decade express significant similarities: they reveal that as reliance on equity financing increases and shareholdings broaden in Europe, a common understanding is emerging of the role that corporate governance plays in the modern European corporation.
Corporate governance is viewed increasingly as a means of ensuring that the exercise of economic power by the corporate sector is grounded in accountability. Different EU Member States tend to articulate the purpose of corporate governance in different ways: some emphasise broad stakeholder interests and others emphasise ownership rights of shareholders. Although the comparative corporate governance literature and popular discussion tend to emphasise “fundamental” differences between stakeholder and shareholder interests, the extent to which these interests are different can be debated. The majority of the codes expressly recognise that corporate success, shareholder profit, employee security and well-being, and the interests of other stakeholders are intertwined and co-dependent.

The growing interest in corporate governance codes among the EU Member States may reflect an understanding that equity investors, whether foreign or domestic, are considering the quality of corporate governance along with financial performance and other factors when deciding whether to invest in a company. The greatest distinctions between corporate governance practices in the EU Member States appear to result from differences in law company law standardisation has been achieved throughout the European Union, some commentators suggest that the remaining legal differences are the ones most deeply grounded in national attitudes, and hence, the most difficult to change. It is important to note that the codes tend to express notions of “best practice” – but the translation of best practice ideals into actual practice may take time to achieve.

Available Versions of this Item

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