Researchers have lately been pointing out the increasing significance of standards in all areas of contemporary life. There have been calls for more research into the processes of setting and following standards. In this article we analyse the effectiveness of codes of corporate governance as a specific type of standard that has become particularly prominent over the last decade. On the basis of an observation-theoretical approach, codes are conceptualized as schemas of observation that establish a field of mutual observations. The effectiveness of codes depends on the one hand on the extent to which they become integrated into recursive cycles of mutual observation between the corporation and the various actors in the field. On the other hand, effectiveness depends on how codes relate to other observational schemas. On the basis of the analysis several propositions about the effectiveness of code regulation are developed, which may be tested in further empirical studies.
Aguilera, R. and Cuervo-Cacurra, A. (2004) `Codes of Good Governance Worldwide: What is the Trigger?' Organization Studies25: 415—44.
2.
Bassen, A., Kleinschmidt, M., Prigge, S. and Zöllner, C. (2006) `Deutscher Corporate Governance Kodex und Unternehmenserfolg . Empirische Befunde', Die Betriebswirtschaft66: 375—401.
3.
Bateson, G. (1972) Steps to an Ecology of Mind. New York: Ballantine.
4.
Bauer, B., Günster, N. and Otten, R. (2004) `Empirical Evidence on Corporate Governance in Europe: The Effect on Stock Returns, Firm Value and Performance', Journal of Asset Management5: 91—104.
5.
Baums, T., ed. (2001) Bericht der Regierungskommission Corporate Governance Unternehmensführung—Unternehmenskontrolle—Modernisierung des Aktienrechts. Köln: O. Schmidt.
6.
Beck, N. and Walgenbach, P. (2005) `Technical Efficiency or Adaptation to Institutionalized Expectations? The Adoption of ISO 9000 Standards in the German Mechanical Engineering Industry', Organization Studies26: 841—66.
7.
Berghe, L. Van den and DeRidder, L. (1999) International Standardisation of Good Corporate Governance. Boston, MA: Kluwer.
8.
Birkner, A. and Hasenauer, C. (2004) `Voluntary Code Could Make Directors Liable', International Financial Law Review [Supplement].
9.
Brealey, R.A. and Myers, S.C. (2003) Principles of Corporate Finance. Boston, MA: McGraw-Hill.
10.
Brunsson, N. (2000) `Organizations, Markets, and Standardization', in N. Brunsson, B. Jacobsson and associates (eds) A World of Standards, pp. 21—39. Oxford: Oxford University Press.
11.
Brunsson, N. and Jacobsson, B. (2000a) `The Contemporary Expansion of Standardization ', in N. Brunsson.B. Jacobsson and associates (eds) A World of Standards, pp. 1—17. Oxford: Oxford University Press.
12.
Brunsson, N. and Jacobsson, B. (2000b) `Following Standards', in N. Brunsson, B. Jacobsson and associates (eds) A World of Standards, pp. 127—137. Oxford: Oxford University Press.
13.
Brunsson, N., Jacobsson, B. and associates, eds ( 2000) A World of Standards. Oxford: Oxford University Press.
14.
Cadbury Committee [Committee on the Aspects of Corporate Governance] (1992) The Financial Aspects of Corporate Governance. London: Burgess Science Press.
15.
Coombes, P. and Wong, S.C.-Y. (2004) `Why Codes of Governance Work', McKinsey Quarterly2: 48—53.
16.
Cromme Code [Government Commission German Corporate Governance Code] (2006) German Corporate Governance Code . Berlin.
17.
Czarniawska, B. and Joerges, B. (1996) `Travels of Ideas,' in B. Czarniawska and G. Sevón (eds) Translating Organizational Change. Berlin : de Gruyter.
18.
Déjean, F., Gond and J.-P., Leca, B. (2004) `Measuring the Unmeasured: An Institutional Entrepreneur Strategy in an Emerging Industry', Human Relations57: 740—64.
19.
Derrida, J. (1994) Force de loi: le `fondament mystique de l'autorité' . Paris: Galilee.
20.
DiMaggio, P.J. and Powell, W.W. (1983) `The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields', American Sociological Review48: 147—60.
21.
Djelic, M.-L. and Sahlin-Andersson, K., eds (2006) Transnational Governance: Institutional Dynamics of Regulation. Cambridge: Cambridge University Press.
22.
Drobetz, W., Schillhofer, A. and Zimmermann, H. (2004) `Corporate Governance and Expected Stock Returns: Evidence From Germany', European Financial Management10: 267—93.
23.
Dutton, J.E. (1986) `Understanding Strategic Agenda Building in Organizations and Its Implications for Managing Change', Scandinavian Journal of Management Studies3: 3—24
24.
Dyck, A. and Zingles, L. (2002) `The Corporate Governance Role of the Media,' in R. Islam (ed.) The Right to Tell: The Role of the Media in Development, pp. 107—140. Washington, DC: World Bank.
25.
Edelman, L.B. (1992) `Legal Ambiguity and Symbolic Structures: Organisational Mediation of Civil Rights Law', American Journal of Sociology97: 1531—76.
26.
Engwall, L. (2006) `Global Enterprises in Fields of Governance', in M.-L. Djelic and K. Sahlin-Andersson (eds) Transnational Governance: Institutional Dynamics of Regulation, pp. 161—79. Cambridge: Cambridge University Press.
27.
Engwall, L. and Morgan, G. (1999) `Regulatory Regimes', in G. Morgan and L. Engwall (eds) Regulation and Organization. International Perspectives, pp. 81—105. London: Routledge.
28.
Financial Reporting Council (2006) The Combined Code on Corporate Governance. London: FRC.
29.
Foerster, H. von (1981) Observing Systems. Seaside, CA: Intersystems.
30.
Gompers, P.A., Ishii, J.L. and Metrick, A. (2003) `Corporate Governance and Equity Prices', The Quarterly Journal of Economics118: 107—55.
31.
Grundsatzkommission Corporate Governance ( 2000) `Corporate Governance-Grundsätze [Code of Best Practice] für börsennotierte Gesellschaften', Der Betrieb53: 238—41.
32.
Hedmo, T., Sahlin-Andersson, K. and Wedlin, L. (2006) `The Emergence of a European Regulatory Field of Management Education', in M.-L. Djelic and K. Sahlin-Andersson (eds) Transnational Governance: Institutional Dynamics of Regulation, pp. 308—28. Cambridge: Cambridge University Press.
33.
Henning, R. (2000) `Selling Standards', in N. Brunsson, B. Jacobsson and associates (eds) A World of Standards, pp. 114—24. Oxford: Oxford University Press.
34.
Hoffman, A. (1999) `Institutional Evolution and Change: Environmentalism and the US Chemical Industry', Academy of Management Journal42: 351—71.
35.
Iskander, M.R. and Chamlou, N. (2000) Corporate Governance: A Framework for Implementation . Washington, DC: World Bank.
36.
Jacobsson, B. (2000) `Standardization and Expert Knowledge', in N. Brunsson, B. Jacobsson and associates (eds) A World of Standards, pp. 40—49. Oxford: Oxford University Press.
37.
Jacobsson, B. and Sahlin-Andersson, K. (2006) `Dynamics of Soft Regulations ', in M.-L. Djelic and K. Sahlin-Andersson (eds) Transnational Governance: Institutional Dynamics of Regulation. Cambridge: Cambridge University Press, pp. 247—65.
Jepperson, R. (1991) `Institutions, Institutional Effects, and Institutionalism ', in W. Powell and P. DiMaggio (eds) The New Institutionalism in Organizational Analysis, pp. 143—63. Chicago, IL: University of Chicago Press.
40.
Kant, I. (1996) `On the Common Saying: That May Be Correct In Theory, But It Is Of No Use In Practice,' in Mary J. Gregor (ed. and trans) The Cambridge Edition of the Works of Immanuel Kant: Practical Philosophy. Cambridge: Cambridge University Press.
41.
Kerwer, D. (2005) `Rules That Many Use: Standards and Global Regulation ', Governance18: 611—32.
42.
Keynes, J.M. (1936) The General Theory of Employment, Interest and Money. London: Macmillan.
43.
Kieser, A., Spindler, G. and Walgenbach, P. (2002) `Mehr Rechtssicherheit durch normative Managementkonzepte und Organisationsnormung?', Zeitschrift für betriebswirtschaftliche Forschung54: 395—425.
44.
Kirsch, W. (1997) Wegweiser zur Konstruktion einer evolutionären Theorie der strategischen Führung. München: Kirsch.
45.
Luhmann, N. (2002) Theories of Distinction. Redescribing the Descriptions of Modernity. Stanford, CA: Stanford University Press.
46.
MacNeil, I. and Li, Xiao (2005) ```Comply Or Explain”: Market Discipline And Non-Compliance with the Combined Code', Corporate Governance14: 486—96.
47.
March, J. (1994) A Primer on Decision Making: How Decisions Happen . New York: Free Press.
48.
March, J. and Olsen, J.P. (1976) Ambiguity and Choice in Organizations. Bergen: Universitetsforlaget.
49.
McBarnett, D. and Whelan, Ch. (1991) `The Elusive Spirit of the Law: Formalism and the Struggle for Legal Control', Modern Law Review54: 848—73.
50.
Meyer, J.W. and Rowan, B. (1977) `Institutionalized Organizations: Formal Structure as Myth and Ceremony', American Journal of Sociology83(2): 340—63.
51.
Mörth, U., ed (2004) Soft Law in Governance and Regulation: An Interdisciplinary Analysis. Cheltenham: Edward Elgar.
52.
North, D. (1981) Structure and Change in Economic History. New York: Norton.
53.
Peasnell, K.V., Pope, P.F. and Young, S. (2000) `Accrual Management to Meet Earnings Targets: UK Evidence Pre- and Post-Cadbury', British Accounting Review32: 415—45.
54.
Perry, J. and Noelke, A. (2005) `International Accounting Standard Setting: A Network Approach', Business and Politics7: 1—s2.
55.
Phillips, D. and Zuckerman, E. (2001) `Middle-Status Conformity: Theoretical Restatement and Empirical Demonstration in Two Markets', American Journal of Sociology107: 379—4:0.
56.
Powell, W. and DiMaggio, P., eds (1991) The New Institutionalism in Organizational Analysis. Chicago, IL: University of Chicago Press.
57.
Power, M. (1997) The Audit Society. Rituals of Verification. Oxford: Oxford University Press.
58.
Rao, H., Greve, H. and David, G. (2001) `“Fool's Gold”: Social Proof in the Initiation and Abandonment of Coverage by Wall Street Analysts', Administrative Science Quarterly46: 502—52v.
59.
Ringleb, H.M., Kremer, Th., Lutter, M. and Werder, A. von (2004) Kommentar zum Deutschen Corporate Governance Kodex. Kodex-KommentarMünchen: Beck.
60.
Sahlin-Andersson K. (2004) `Emergent Cross-Sectional Soft Regulations: Dynamics at Play in the Global Compact Initiative', in U. Mörth (ed.) Soft Law in Governance and Regulation: An Interdisciplinary Analysis. Cheltenham: Edward Elgar.
61.
Scott, R. (2001) Institutions and Organizatons. Thousand Oaks, CA: Sage.
62.
Seibt, Ch. H. (2002) `Deutscher Corporate Governance Kodex und Entsprechenwerklärung (§ 161 AktG-E)', Die Aktien-Gesellschaft47: 249—59.
63.
Seidl, D. (2007) `General Strategy Concepts and the Ecology of Strategy Discourses: A Systemic-Discursive Perspective', Organization Studies28: 197—218.
64.
Spencer Brown, G. (1969) The Laws of Form. London: Allen and Unwin.
65.
Stiles, P. and Taylor, B. (1993) `Benchmarking Corporate Governance: The Impact of the Cadbury Code', Long Range Planning26: 61—71.
66.
Stock, M., Copnell, T. and Wicks, C. (1999) The Combined Code: A Practical Guide. London: Gee Publishing.
67.
Strenger, Ch. (2004) `The Corporate Governance Scorecard: A Tool for the Implementation of Corporate Governance', Corporate Governance12: 11—15.
68.
Walgenbach, P. (2001) `The Production of Distrust by Means of Producing Trust', Organization Studies22: 693—94.
69.
Weil, Gotshal and Manges L.L.P. (2002) Comparative Study of Corporate Governance Codes Relevant to the European Union and Its Member States. Brussels: European Union—Internal Market Directorate General.
70.
Weil, Gotshal and Manges L.L.P. (2003) International Comparison of Selected Corporate Governance Guidelines and Codes of Best Practice. New York . Weil, Gotshal and Manges.
71.
Welch, I. (2000) `Herding Among Security Analysts', Journal of Financial Economics58: 369—96.
72.
Werder, A. von, Talaulicar, T. and Kolat, G. (2006) `The German Corporate Governance Code: General Acceptance and Neuralgic Norms—A Second Look', International Journal of Public Policy1(4): 435—50.
73.
Werder, A. von, Talaulicar, T. and Kolat, G.L. (2005) `Compliance With the German Corporate Governance Code: An Empirical Analysis of the Compliance Statements by German Listed Companies', Corporate Governance: An International Review13(2): 178.
74.
Williamson, O. (1975) Markets and Hierarchies: Analysis and Antitrust Implications. New York: The Free Press.
75.
Wittgenstein, L. (1953) Philosophical Investigations. Oxford: Blackwell.
76.
Wymeersch, E. (2005) `Implementation of the Corporate Governance Codes ', in K. Hopt, E. Wymeersch, H. Kanda and H. Baum (eds) Corporate Governance in Context: Corporations, States, and Markets in Europe, Japan, and the US, pp. 403—19. Oxford: Oxford University Press.
77.
Zucker, L. (1986) `Production of Trust: Institutional Sources of Economic Structure, 1840—1920', in B.M. Staw and L.L. Cummings (eds) Research in Organizational Behavior 8: 53—111. Greenwich: JAI.
