- Klaus Ilmonen
A Nordic Corporate Governance Index
From May 28, 2017
Over the years there have been many efforts to develop indices for comparing corporate governance regulation. However, many indices have not taken into account the environment in which the companies operate resulting in misguided comparisons. In fact, the same metrics may not be appropriate for assessing the quality of corporate governance in different institutional environments and for different structures of corporate ownership - each with their own governance challenges.
In this study, efforts have been made to identify metrics that are relevant for concentrated ownership in a Nordic context. The study finds that many established corporate governance indices use metrics that are not relevant in the context of concentrated ownership. This has resulted in inaccurate comparisons of country-level corporate governance regulation. Corporate governance mechanisms should be analyzed and rated in the context of the relevant corporate environment, recognizing functionally equivalent mechanisms. The study builds a framework for a Nordic corporate governance index and rates how Finnish and Swedish corporate governance regulation addresses the governance challenges characteristic to the Nordic environment. The study also proposes measures to strengthen governance in these jurisdictions.
The article is published in the European Business Law Review (EULR Vol.28 issue 3): A Framework for a Nordic Corporate Governance Index