Are there any Dangers Behind their Comply-or-Explain Mechanism?
British codes, starting with the Cadbury Report (1992), are venerable market-targeted documents that have reached an uncontestable degree of maturity. Are there any dangers behind their ‘comply or explain’ mechanism? It can be argued that the ties that bind accountability / input legitimacy / regulation together are unbreakable. A system cannot be rendered accountable unless the legitimacy it claims is founded on the integrity of the decision-making process. On the other hand, decision-making is regulated in order to prevent abuse. Governance codes can be seen as a tradeoff: they promote a system that involves output legitimacy, within a framework of accountability and strictly designed institutions. In other words, the fantasy world of governance codes is populated with enemy races – shareholders and stakeholders – fighting for supremacy. Corporate governance codes appear as politically polluted documents, comprising ambiguous and contradictory propositions. In our opinion, only the C
