To read the full version of this content please select one of the options below:

Measuring the quality of the “comply or explain” approach: Evidence from the implementation of the Greek corporate governance code

Michail Nerantzidis (Public Administration department, Panteion University of Social and Political Sciences, Athens, Greece)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 5 May 2015




This paper provides evidence regarding the efficacy of the “comply or explain” approach in Greece and has three objectives: to improve our knowledge of the concept of this accountability mechanism, to elevate auditors’ potential role in the control of corporate governance (CG) statements and to contribute to the discussion about the reform of this principle; a prolonged dialogue that has been started by European Commission in the light of the recent financial crisis.


The approach taken is a content analysis of CG statements and Web sites of a non-probability sample of 144 Greek listed companies on the Athens Stock Exchange for the year 2011. Particularly, 52 variables were evaluated from an audit compliance perspective using a coding scheme. From this procedure, the level of compliance with Hellenic Federation of Enterprises (SEV) code, as well as the content of the explanations provided for non-compliance, were rated.


The results show that although the degree of compliance is low (the average governance rating is 35.27 per cent), the evaluation of explanations of non-compliance is even lower (from the 64.73 per cent of the non-compliance, the 40.95 per cent provides no explanation at all).

Research limitations/implications

The research limitations are associated with the content analysis methodology, as well as the reliability of CG statements.

Practical implications

This study indicates that companies on the one hand tend to avoid the compliance with these recommendation practices, raising questions regarding the effectiveness of the SEV code; while on the other, they are not in line with the spirit of the CG code, as they do not provide adequate explanations. These results assist practitioners and/or policy-makers in perceiving the efficacy of the “comply or explain” approach.


While there is a great body of research that has looked into the compliance with best practices, this study is different because it is the first one that rates not only the degree of the compliance with the code’s practices but also the content of the explanations provided for non-compliance. This is particularly interesting because it adds to the body of research by providing a new approach in measuring the quality of the “comply or explain” principle in-depth.



The author would like to thank the Heraclitus II: Investing in knowledge society through the European Social Fund, as this paper draws on data collected from the author’s PhD thesis. I am also very grateful to John Filos for his comments and supervision, as well as to Nick Travlos, George Leledakis and Annita Florou for the constructive conversations during the authors PhD research. Furthermore, the author would like to thank Zoi Karoulia for her outstanding research assistance, Stamatis Dritsas for his valuable comments regarding auditors’ limitations and Liana Leonidou for her helpful comments on the language editing. Finally, the author would like to thank the two anonymous reviewers and the editors from the Managerial Auditing Journal for their invaluable comments and suggestions. All errors remain the author’s.


Nerantzidis, M. (2015), "Measuring the quality of the “comply or explain” approach: Evidence from the implementation of the Greek corporate governance code", Managerial Auditing Journal, Vol. 30 No. 4/5, pp. 373-412.



Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited