3.4 Summary and conclusions

In this last section, what has been discussed above is summarised before being taken into account in part II of this research when deliberating on the manner in which the comply or explain principle is applied in practice. This chapter reviews: How should corporate governance codes and the comply or explain principle be qualified legally and in what manner is it believed that cultural patterns influence the application of the principle?

To be able to answer this question and to study the comply or explain principle as used in practice more in-depth and comprehensively, the different 'modes' in which corporate governance systems and, more in particular, the comply or explain principle can and do function are reviewed. These different 'modes' largely cohere with a country's culture and legal system. Hence, this chapter elaborates upon culture and the legal qualification of the corporate governance codes and the comply or explain principles researched. In section 3.2 the features of law and the formal legal sources are briefly described first to attempt to provide a legal qualification for corporate governance codes and the comply or explain principle. Rules of law (rechtsregels) are abstract and general rules on how to behave, aimed at anyone in a specific situation, as acknowledged and applied by organs or officials such as civil servants and magistrates. Legality (issued by authorised officials) and legitimacy (justification) are required. If a rule originates from a legal source it is also regarded as law. The five formal legal sources are (i) legislation, (ii) custom), (iii) jurisprudence, (iv) treaty and (v) legal principles. Thereafter section 3.2 attempts to qualify the corporate governance codes legally. This qualification differs per country and code, even per code provision and no agreement exists in legal doctrine. In the underlying research it is believed that in general regulation in codes can be considered law whenever these rules are in line with the applicable legislation or derivable from legal sources (legislation, custom, jurisprudence, treaty and legal principles). Nevertheless, in the end it remains up to the courts to decide what is considered law and codes remain a dynamic and changeable collection of norms and values. It is far more relevant to actual practice to make a distinction in judicial corporate governance arrangements, since apparently a 'classical' legal arrangement such as legislation is not suitable. Corporate governance codes can be considered new judicial arrangements that are strengthened by the accountability managers have to provide to their stakeholders by means of the comply or explain principle. The arrangements involve the code itself as an instrument (of which the comply or explain principle is a part), but also the environment in which it functions, the actors involved and their balance of powers (Voogsgeerd 2006). Which judicial corporate governance arrangement is applicable varies in time and place and is discussed per country in the chapters to come. Section two therefore provides a general explanation about the characteristics of the five judicial corporate governance arrangements and the evolution of the comply or explain principle in that respect.

Culture can be regarded as an all-embracing factor influencing corporate governance systems that incorporates other important factors such as economical, legal and political factors. The studies as reviewed above in section 3.3 show that culture has strong effects on these new judicial corporate governance arrangements and should be reflected upon when performing transnational studies on corporate governance. Moreover, it is concluded that the influence of culture ought not to be studied with the help of only one research instrument, nor can a comparative analysis of corporate governance rely on one single method of classification (such as only legal or only economical classifications). A point of critique on the above studies is that the focus is often primarily on the results and the research method. What the results imply today and in the future for the corporate governance in specific countries or within the EU corporate governance model is not or very briefly discussed. Moreover, the convergence debate as elaborated upon in section 1.3 should also be taken into account. The importance and relevance of culture is revealed, but the studies usually lack further analysis of these results and coherence with other disciplines of interest (such as economical and legal). For these reasons the results of the studies reviewed above are combined in table 3.3.2 for the five countries specific to this research, to be able to integrate these outcomes in the research in part II of the application of the comply or explain principle in practice in Belgium, Germany, Italy, the Netherlands and the UK.

The main conclusions of this chapter and simultaneously the answer to this chapter's research question are therefore as follows: