German Corporate Governance Code and Unaccepted Recommendations
From 2002 the German Corporate Governance Commission introduced a Corporate. Governance Code to companies listed on the German stock exchange. The Code provides blanket recommendations. Each company in noncompliance with one or more of the recommendations must explain in writing. The present study presents the first empirical analysis of compliance.
Regarding the 2003 amended Code, this study first identifies the Most Commonly
Unaccepted Recommendations (MCURs). Next it uses the MCUR's to sort companies
as either compliant or noncompliant. Thirdly the study measures each companies'
level in EPS (Earnings per Share) and in average stock price. Finally it
compares the overall results of the compliant versus the noncompliant companies
of the 2003 recommendations. The results show no correlation between compliance
and change in EPS. The results do show a strongly positive correlation
between compliance and rise in stock price.
keywords: Corporate Governance Code, Comply or Explain, Most Commonly Unaccepted Recommendations (MCURs), D&O insurance
JEL Classification: G34, F21, M21