Factors Determining the Adherence to Corporate Governance Codes: Case Study of The Banking Sector in Ireland

Abstract

Corporate governance involves principles regulating the conduct of corporate business firms. It ensures transparency, accountability and upholds the interest of shareholders and stakeholders. Irish corporate governance is structured using the Comply-Explain (CEP) approach, where firms comply with corporate governance principles or explain reasons for non-compliance. This approach is said to be weak, inefficient as companies do not adhere to codes neither give sufficient reasons for non-adherence. This research investigates the adherence level of corporate governance codes amongst Irish banks. The research collects data from interviews of two bank managers and three bank boards of directors. Overall, the study discovers that earlier claims of the inefficiency, non-adherence and lack of sufficient explanations that trailed the CEP approach are false regarding Irish banks. The study finds that Irish banks adhere to corporate governance codes due to the impact of the Central Bank of Ireland, bank customers, and the role of the non-executive directors. The study also discovers the challenges associated with adherence to corporate governance codes in Ireland includes; a constant update of codes, lack of uniform implementation of regulations, and impacts on investors. It is, therefore, recommended that the earlier mentioned challenges be addressed through a time-efficient update of codes and creating a central standard for the implementation of regulations. This will improve the adherence to corporate governance principles for the growth and development of the Irish financial sector