Comply or explain: Exemplifying 'reasonably' good corporate governance
Authors: Nordberg, D.
Conference: WINIR Symposium on the Nature and Governance of the Corporation
Dates: 22-24 April 2015Abstract:
Attempts to determine what constitutes “good” corporate governance have become mired in the quicksand of the ethical conflict between duty and utility, virtue and rights, as well as the fight over for whose good the organization exists. This paper takes a different tack. Drawing upon evidence from the efforts to build and develop the UK code of corporate governance, it argues that the nature of “good” is intractable, but that in the practical world a philosophically pragmatic approach applies, exemplified in the preference for a comply or explain approach rather than more formal modes of regulation. Using Toulmin’s (2001) advocacy the reasonable, in opposition to the rational, and evidence about the principle of “comply or explain”, it argues that in codifying corporate governance, the UK has in effect opted for “reasonably” good governance, rather than best practice. In so doing, the code reflects concerns embodied in competing views of contributors about the contingent nature of organizational life and strategies and the uncertain benefits of corporate governance mechanisms.