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

Kevin Campbell; Magdalena Jerzemowska; Krzysztof Najman

doi:10.1108/14720700910998184

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Corporate Governance

ISSN: 1472-0701

Online from: 2001

Subject Area: Business Ethics and Law

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

Document Information:
Title:	Corporate governance challenges in Poland: evidence from “comply or explain” disclosures
Author(s):	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)
Citation:	Kevin Campbell, Magdalena Jerzemowska, Krzysztof Najman, (2009) "Corporate governance challenges in Poland: evidence from “comply or explain” disclosures", Corporate Governance, Vol. 9 Iss: 5, pp.623 - 634
Keywords:	Best practice, Boards of Directors, Codes, Corporate governance, Meetings, Poland
Article type:	Research paper
DOI:	10.1108/14720700910998184 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Acknowledgements:	The authors would like to thank the Polish Ministry of Scientific Research and Information Technology (Ministerstwo Nauki i Informatyzacji – MNiI) for providing financial support for this research as part of project 0302/H02/2005/29, “An investigation of the requirements for change in the Polish code of corporate governance”. They would also like to thank Professor Ian Fraser of the University of Stirling and Mr Willie Henry of Glasgow Caledonian University for helpful comments, along with participants at the 4th International Conference on Corporate Governance – Global Developments in Corporate Governance – held at Birmingham Business School in July 2006. Received 1 March 2008 Revised 9 June 2008 Accepted 22 October 2008.
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.