In the paper, Learning Mores and Board Evaluations - Soft Controls in Corporate Governance, which was recently made publicly available on SSRN, I argue that the prevailing boardroom mores, the unwritten rules, are at one end of having an impact on board effectiveness. Legislation, the more tangibly written rules, is at the other end. In between are voluntary codes of conduct, or legally embedded corporate governance codes.
How, without switching to increasing degrees of legislation with hard controls, do we provide direction to desirable conduct in the boardroom and thus to more effective corporate governance? International corporate governance codes were developed in the 1990s in response to declining trust in the financial system and exchange-listed companies. In recent decades, research into corporate governance focused mainly on the design of governance. Corporate governance codes were drawn up with guidelines for executive directors, non-executive directors and shareholders. The requirements in the corporate governance codes were aimed principally at establishing the conditions under which monitoring could be conducted, and less on the actual way in which this monitoring was conducted.read more