4.7.5 Conclusions

In the introduction of this chapter the research question to be examined in this chapter was formulated: What is, based upon comparative legal analysis, the layout of the comply or explain principle as embedded in the corporate governance systems of five Member States and does a common understanding of the principle's scope and most effective form currently exist within the EU? As stated above, after the theoretical framework of this study as sketched in part I, part II encompasses the empirical research and examines the application of the comply or explain principle of the five countries under review in practice by means of a comparative legal analysis (chapter 4) and content analysis of corporate governance statements (chapter 5). The purpose thereof is to be able to analyse the entire empirical as well as theoretical research on the comply or explain principle in chapter 6, and to provide recommendations on how the comply or explain principle should be applied in practice, i.e. the conditions that need to be put in place for it to work properly and as intended.

Differences between the countries under review in the lay-out of their corporate governance systems (with a focus on the codes and comply or explain principle) can still be seen. Especially the aim and a country's corporate governance history are reflected in the codes (path dependency). Does a country genuinely want to improve its corporate governance structure as a result of criticism and previous scandals? Or does a country want to enforce its competitive position within the EU and try to be in line with the international best practice standard? Copying behaviour is often the result. At first glance the main topics in the code often seem similar, and typical cultural features are deliberately left outside the code's provisions and some standardisation can be seen. For instance, all the codes under research strongly focus on the board's functioning and structure. But when a closer look is taken differences can still be seen, such as whether or not there is a focus on a specific board structure or extensive material independence criteria. Moreover, the level of detail of the codes differs, due to poor compliance in the past or the uncertainty avoidance level in a country's culture, as well as to whether the code is a copy of legislation or innovative rules on self-regulation are actually formulated. Culture and the resulting differences are reflected, perhaps not so much in the contents per se, but more in the code's and comply or explain principle's embedding and functioning in practice. The comply or explain principle and its embedding sometimes already were, or over time became part of the corporate culture, whether or not accelerated by the importance of listed companies in a country.

Overall the lay-out of the corporate governance system of the countries under research is properly designed nowadays, which should be reflected in an improved functioning as well. Each country has a national corporate governance code and comply or explain principle in place. This lay-out is easy to keep up-to-date due to the codes as a hybrid instrument. Some countries update their national code annually to the current practice, others less frequently. The comply or explain principle itself of course also facilitates ' made to measure compliance'. The common understanding of the principle itself is gradually increasing in practice, by copying the UK, by finding out which rules it would be best for the principle to apply to and which embedding suits a country best. Directive 2006/ 46/EC achieved further harmonisation by making national codes and the comply or explain principle obligatory. It is left to countries and companies to decide whether 100% compliance with the codes should be aimed for or ' made to measure compliance'. It is also left to them to decide on the rules regarding accountability and whether supervisory instruments should be easy to use or in fact function as a means of exerting pressure. Based on theoretical research a common understanding and harmonisation are increasing - although improvements definitely remain necessary (section 4.7.3). Whether this works as such in practice and which improvements are deemed necessary will be examined further by means of empirical research in the chapter below.

The main conclusions of this chapter are therefore as follows: