When the solution becomes the problem: the triple failure of corporate governance codes

Corporate governance codes are widely regarded as the ultimate sign of a modern and efficient market economy. Bypassing the comparatively slow machinery of legislation, corporate governance codes are now a common instrument for corporations and shareholders to signal their perceptions of best practice and steer the governance of corporations in the desired direction.1 When a country’s corporate legislation is amended, corporate governance codes tend to be altered too—to always be one step ahead. But in what direction are these steps taking us? And who is deciding the aims and means? Already in 2006, Steen Thomsen criticised corporate governance codes for lacking a ‘theoretical or empirical rationale’ to the extent that they are ‘unlikely to do much good (and if so only by accident)’.2 Since then, corporate social responsibility language has made its way into ever more codes, without this necessarily resolving any of the increasingly cited issues with the codes.