New governance rules not helping performance

News Article - 18 July 2006
Category: Business

Company performance has not really been affected by new rules on corporate governance, claims a new survey.

The investigation by executive search firm Russell Reynolds Associates found that European companies had seen little benefit from tightened legislation regarding corporate governance.

The survey of European chairmen found that despite the near universal adoption of the UK's Combined Code, senior executives in the UK were more negative about it than any other country was about their revised rules.

"Perhaps this reflects the long tradition in the UK of light regulation compared with a more centralised approach in continental Europe," said Luke Meynell of Russell Reynolds.

A marked difference in views was also evident between UK chairmen and their continental counterparts.

"Europe's chairmen generally agree that tighter corporate governance is a good safety measure to protect shareholders' interests, but they are clear it has not led to an improvement in company performance," added Mr Meynell.

Stringent Sarbanes-Oxley rules in the US also continue to make listing in the US unappealing.

A total of 58 per cent of US-listed companies admitted that they would consider delisting due to the regulation, with 70 per cent of non-US listed firms saying they have been put off.

Article keywords:

---

More industry news

• Think tank warns UK may have already slipped back into recession
• Growing demand for HR staff in technology and international sectors
• Boosting business growth a ‘priority’ to avoid Eurozone slowdown
• HMRC launches alternative disputes pilot scheme this week
• December employment statistics disregard gloomy recruitment predictions
• Eurozone manufacturing PMI shows modest improvement
• UK scores highly for economic governance by ratings agency
• Government launches two-year project focusing on manufacturing sector
• Burden of regulation on UK businesses ‘too high’

Back to news home page »