Uniformity as response to soft law: Evidence from compliance and non‐compliance with the Dutch corporate governance code

The objective of the paper is to examine how firms have dealt with the trade‐off between flexibility and uncertainty that is characteristic for the decision‐making of firms in coping with self‐regulatory initiatives in general and the comply‐or‐explain principle in corporate governance in particular. Using unique data for 126 listed Dutch firms, we find that firms respond to this self‐regulatory initiative by largely complying with the code recommendation, possibly out of fear that the firm's reputation may be damaged. Furthermore, we find evidence suggesting that firms confine themselves to adopting a specific set of code recommendations and use similar arguments to explain non‐compliance. Our findings indicate uniformity in adopting the standard of good governance which is not in line with the logic of corporate governance codes and casts doubt on the effectiveness of this form of soft law. Overall, the paper's findings indicate that more restrictive (regulatory) instruments may be necessary to make firms conform to the spirit of codes.     

Formal institutions,informal institutions,and red tape: A comparative study

Firms across the globe are affected by red tape, but there is little academic research on how country‐level institutions shape red tape perceptions. Drawing on institutional theory, we argue that a variety of formal and informal country‐level institutions affect perceptions of red tape in the private sector. We test our hypotheses using six data sources, including the World Economic Forum and the World Bank. Our results indicate that red tape is weakly associated with a country's level of formalization and rule enforcement effectiveness and more prevalent in federal as opposed to unitary states. As for informal institutions, we find that red tape perceptions are more pronounced in countries with an increased conservative political ideology, higher levels of corruption, and cultures that emphasize individualism and uncertainty avoidance. We conclude with a discussion of the implications for theory and practice.