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Corporate governance challenges in Poland: evidence from “comply or explain” disclosures

Kevin Campbell (Based in the Division of Accounting and Finance, at the School of Management, University of Stirling, Stirling, UK)
Magdalena Jerzemowska (Based in the Department of Corporate Finance at the Faculty of Management, University of Gdansk, Sopót, Poland)
Krzysztof Najman (Based in the Department of Statistics at the Faculty of Management, University of Gdansk, Sopót, Poland)

Corporate Governance

ISSN: 1472-0701

Article publication date: 16 October 2009

Abstract

Purpose

The purpose of this paper is to analyse the reasons for non‐compliance by Polish listed companies with elements of the Polish code of corporate governance Best Practices in Public Companies 2005.

Design/methodology/approach

Based on 250 publicly available compliance statements filed in 2005 by companies listed on the Warsaw Stock Exchange (WSE) content analysis is used to classify the explanations provided for non‐compliance with those corporate governance principles that attract high levels of non‐compliance.

Findings

The data analysis reveals that, despite a high level of overall compliance, three out of 50 code principles attract high levels of non‐compliance. These principles concern the independence of supervisory board members, the composition of supervisory board committees and the appointment of auditors. The most contentious principle concerns the independence of supervisory board members, due to the presence of many majority‐owned companies on the Warsaw Stock Exchange.

Practical implications

The paper sheds light on the operation of the “comply or explain” approach to corporate governance in Poland and provides suggestions for improving the level and quality of compliance with the revised corporate governance code Best Practices for WSE Listed Companies, applicable from 2008 onwards.

Originality/value

The paper provides an empirical investigation of the reasons given by Polish companies for non‐compliance with the most controversial corporate governance principles. It highlights a tendency for some companies to report compliance that is conditional, suggesting that reported compliance under‐represents the true level of compliance. We suggest that establishing a monitoring committee tasked with evaluating the quality of explanations for non‐compliance and reducing ambiguities in the wording of code principles will improve the quality of Polish corporate governance in the long term.

Keywords

Citation

Campbell, K., Jerzemowska, M. and Najman, K. (2009), "Corporate governance challenges in Poland: evidence from “comply or explain” disclosures", Corporate Governance, Vol. 9 No. 5, pp. 623-634. https://doi.org/10.1108/14720700910998184

Publisher

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Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited