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Selective compliance with the corporate governance code in Mauritius: Is legitimacy theory at work?

Selective compliance with the corporate governance code in Mauritius: Is legitimacy theory at work?
Selective compliance with the corporate governance code in Mauritius: Is legitimacy theory at work?
Purpose of this paper: This study investigates compliance with the corporate governance code in an African developing economy (Mauritius).

Methodology/approach: We examine the annual reports of 41 listed companies to assess the extent of compliance with the code and to analyze the wording of compliance statements. We also carry out in-depth semi-structured interviews with selected company directors to understand the reasons for compliance (or non-compliance).

Findings: Initial findings indicate a reasonable level of compliance with the more visible requirements of the code but noteworthy non-compliance also emerges, particularly in relation to the low number of company boards being chaired by independent directors, to uncertainties on the actual operation of board committees, and to the widespread non-disclosure of directors’ remuneration. Furthermore, compliance statements were found to be vague, ambiguous, or even inconsistent with the extent of compliance disclosed in the reports. We believe these are indications that many of the companies are adhering selectively with the code to project an image of symbolic compliance. Our in-depth follow-up interviews with directors largely confirm this behaviour of selective compliance.

Research implications: We suggest that the pursuit of legitimacy as an operational resource – rather than efficiency-led rationales – emerges as a potential theoretical explanation for the adoption of the corporate governance code in Mauritius.

Originality /value of paper: We bring evidence on how the corporate governance code is being understood and rationalized in a developing economy. We rely on a combination of annual report disclosures, compliance statements, and interview data to investigate corporate governance compliance.







1479-3563
239-272
Soobaroyen, Teerooven
6686e2f8-564f-4f7f-b079-9dc8a2f53a48
Mahadeo, Jyoti Devi
4cfcc703-7dc3-4657-8903-1784b5568070
Soobaroyen, Teerooven
6686e2f8-564f-4f7f-b079-9dc8a2f53a48
Mahadeo, Jyoti Devi
4cfcc703-7dc3-4657-8903-1784b5568070

Soobaroyen, Teerooven and Mahadeo, Jyoti Devi (2008) Selective compliance with the corporate governance code in Mauritius: Is legitimacy theory at work? Research in Accounting in Emerging Economies, 8, 239-272. (doi:10.1016/S1479-3563(08)08009-2).

Record type: Article

Abstract

Purpose of this paper: This study investigates compliance with the corporate governance code in an African developing economy (Mauritius).

Methodology/approach: We examine the annual reports of 41 listed companies to assess the extent of compliance with the code and to analyze the wording of compliance statements. We also carry out in-depth semi-structured interviews with selected company directors to understand the reasons for compliance (or non-compliance).

Findings: Initial findings indicate a reasonable level of compliance with the more visible requirements of the code but noteworthy non-compliance also emerges, particularly in relation to the low number of company boards being chaired by independent directors, to uncertainties on the actual operation of board committees, and to the widespread non-disclosure of directors’ remuneration. Furthermore, compliance statements were found to be vague, ambiguous, or even inconsistent with the extent of compliance disclosed in the reports. We believe these are indications that many of the companies are adhering selectively with the code to project an image of symbolic compliance. Our in-depth follow-up interviews with directors largely confirm this behaviour of selective compliance.

Research implications: We suggest that the pursuit of legitimacy as an operational resource – rather than efficiency-led rationales – emerges as a potential theoretical explanation for the adoption of the corporate governance code in Mauritius.

Originality /value of paper: We bring evidence on how the corporate governance code is being understood and rationalized in a developing economy. We rely on a combination of annual report disclosures, compliance statements, and interview data to investigate corporate governance compliance.







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More information

Published date: 2008

Identifiers

Local EPrints ID: 80407
URI: http://eprints.soton.ac.uk/id/eprint/80407
ISSN: 1479-3563
PURE UUID: 88646397-9ff6-42cd-bd7c-28e6e3587a5d
ORCID for Teerooven Soobaroyen: ORCID iD orcid.org/0000-0002-3340-1666

Catalogue record

Date deposited: 24 Mar 2010
Last modified: 14 Mar 2024 02:55

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Contributors

Author: Teerooven Soobaroyen ORCID iD
Author: Jyoti Devi Mahadeo

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