The Labyrinth of International Governance Codes: The Quest for Harmonization

Abstract

The background to this research is based on the considerable debate as to whether there will ever be one international currency, one “business” language spoken or one set of accounting standards applicable to all businesses listed in various countries stock exchanges. Governance principles are no different! Is it possible to create one set of rules or principles to guide all businesses across borders? This research compares the governance standards and regimes across the globe, from China, to the Nordic region (Sweden, Norway, Denmark, Iceland & Finland), Europe, Asia-Pacific (New Zealand, Australia) and the United States of America. Using archival data, governance codes from around the world are compared and contrasted. The findings show that across borders governance codes are very similar, with the opportunity to create a Global Governance Standard (GGS), applicable to any business in any country. The Global Governance Standard (GGS) is a one-size-fits-all regime applicable to businesses listing on stock exchanges. The GGS is not unlike the harmonisation of accounting standards. The “one-size-fits-all” GGS could potentially apply to any large business, listed on any stock exchange, creating efficiencies and ease of comparison for potential stakeholders interested in businesses. The “BOARDSS” model can be used by listed companies, in order to satisfy corporate governance codes from across the globe. Board: to ensure the board are selected carefully. Open: The make sure that the board is transparent and accountable. Auditor Independence: ensure accounts are audited by an independent auditor. Remuneration: the CEO and executive staff are reviewed, and supported by a smaller remuneration committee. Directors are selected for their ability to “add-value” to the strategic direction of the company, and the support of the CEO. Directors’ performance should be reviewed annually. Reducing the labyrinth of governance codes to just one GGS would create a uniform approach to governance, supported by government and stock exchanges around the world. A GGS would be the final evolution in the notion of governance since the codes of conduct of Hammurabi of 1800 BC. Let the borders be gone, and the Global Governance Standard (GGS) left standing as the final chapter in governance evolution.