Corporate Governance in the Netherlands: an overview of the application of the Tabaksblat Code in 2004

• Author: Gerwin Van der Laan,Niels Hermes,Hans Van Ees,Theo Postma,Dirk Akkermans,Arjen Van Witteloostuijn,Reggy Hooghiemstra
• Date: 01 November 2007
• Published date: 01 November 2007
• DOI: http://doi.org/10.1111/j.1467-8683.2007.00634.x

Corporate Governance in the

Netherlands: an overview of the

application of the Tabaksblat Code

in 2004

Dirk Akkermans, Hans van Ees*, Niels Hermes,

Reggy Hooghiemstra, Gerwin Van der Laan,

Theo Postma and Arjen van Witteloostuijn

This article examines the overall acceptance of the best practice provisions contained in the

Dutch corporate governance code and identif‌ies those that receive comparably less agreement

among 150 Dutch listed companies in 2004. The f‌indings indicate a high level of compliance

with the Code. Moreover, the extent of compliance is positively associated with company size.

Provisions related to the remuneration of board members, independence of supervisory board

members, and requirements with respect to internal control systems stand out when it comes

to non-compliance. In addition, the nature and content of the explanations provided for

non-compliance are remarkably similar across companies, which may indicate symbolic com-

pliance with the Code’s best practice provisions.

Keywords: Corporate governance, code, compliance, the Netherlands

1. Introduction

Corporate governance codes are sets of

business best practices. They have prolif-

erated around the globe since the publication

of the Cadbury Report in 1992. In general the

objective of corporate governance codes is to

enhance the quality and transparency of man-

agement, thereby improving company perfor-

mance and restoring investors’ conf‌idence

(e.g. Werderet al., 2005). Corporate governance

codes are regarded as effective instruments of

self-regulation, outlining best practice provi-

sions with respect to management, supervi-

sion, disclosure and auditing (Wymeersch,

2005; Aguilera and Cuervo-Cazurra, 2004).

The Dutch corporate governance code,

better known as the Tabaksblat Code, was

published in December 2003 and became

effective on January 1, 2004. As of that date

listed companies are required to present a

separate corporate governance chapter in their

annual reports. In this chapter a company has

to indicate to what extent it has complied with

the best practice provisions of the Tabaksblat

Code and, if it does not do so, why and to what

extent it does not comply with them (i.e.

comply or explain). In this article, a company

that either complies with a provision or

explains why it does not comply, is said to

apply that provision.

This article presents an overview of the

application of the best practice provisions of

the Dutch corporate governance code. Firstly,

we examine the extent to which Dutch listed

companies comply with the best practice pro-

visions of the Tabaksblat Code. Secondly, we

investigate the nature of explanations pro-

vided for non-compliance. This article adds

to the body of research that has looked into

the compliance with best practice provisions

of national corporate governance codes (e.g.

*Address for correspondence:

Facultyof Economics and Busi-

ness, International Economics

& Business, Landleven 5, 9747

AD Groningen, The Nether-

lands. E-mail: h.van.ees@rug.nl

1106 CORPORATE GOVERNANCE

Volume 15 Number 6 November 2007

© 2007 TheAuthors

Journal compilation © 2007 BlackwellPublishing Ltd, 9600 Garsington Road,

Oxford, OX4 2DQ, UK and 350 Main St,Malden, MA, 02148, USA