Measuring the Quality of ‘Comply or Explain’ Approach : Evidence from the Implementation of the Greek Corporate Governance Code

This paper contributes to our understanding the quality of compliance and non-compliance with best practices of corporate governance. Specifically, the level of compliance with SEV code, as well as the content of the explanations provided for non-compliance, are rated. Using a sample of 144 Greek listed companies on the Athens Stock Exchange, I found that although the degree of compliance is low (the average governance rating is 35.27%), the evaluation of explanations of non-compliance is even lower (from the 64.73% of the non-compliance, the 40.95% provides no explanation at all). These results indicate that companies on the one hand tend to avoid the compliance with these recommendation practices, raising questions regarding the effectiveness of the SEV code; while on the other, they are not in line with the spirit of the CG code, since they do not provide adequate explanations. This pioneering study adds to the body of research by providing a new approach in measuring the quality of ‘comply or explain' approach in-depth."When you can measure what you are speaking about, and express it in numbers, you know something about it; But when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind; It may be the beginning of knowledge, but you have scarcely in your thoughts advanced to the state of science". Lord Kelvin (1824-1907), British mathematical physicist and engineer