Corporate governance: Cadbury, Greenbury and Hampel — A review
| DOI | https://doi.org/10.1108/eb024997 |
| Published date | 01 January 1999 |
| Date | 01 January 1999 |
| Pages | 57-67 |
| Author | Helen Short |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 7 Number 1
Corporate governance: Cadbury, Greenbury
and Hampel — A review
Helen Short
Received: 11th August, 1998
Leeds University Business School, University of Leeds, Leeds, LS2 9JT; tel: 0113 2334463;
fax: 0113 233 4459.
Helen Short is a Senior Lecturer in
Accounting and Finance at Leeds
Univer-
sity Business School and senior research
fellow of the International Institute of Bank-
ing and Financial Services at the
Univer-
sity of Leeds. She has published
numerous refereed papers and book chap-
ters on corporate governance and is parti-
cularly interested in the role of
insititutional shareholders in the govern-
ance of corporations.
ABSTRACT
Concern over the standards of
corporate
gov-
ernance in the UK has led to the publication
of three committee reports: Cadbury, Green-
bury and, most recently, Hampel. Following
the publication of the Hampel Report, the
Hampel Committee has produced a document
providing a set of principles and codes to
embrace the Cadbury, Greenbury and Hampel
recommendations
—
the Combined Code (June
1998).
The purpose of this paper is to review
the recommendations of the Cadbury, Green-
bury and Hampel reports and to consider
whether the
recommendations
of the Combined
Code represent a significant shift in emphasis
from the accountability aspects of corporate
governance to consideration of the need for
governance systems to provide structures and
incentives to allow business enterprise to flour-
ish.
INTRODUCTION
Although corporate governance has been a
long-standing issue, the debate was given
fresh impetus, in the UK at least, by a
number of well-publicised corporate pro-
blems in the late 1980s. These involved
creative accounting, spectacular business
failures, the apparent ease with which
unscrupulous directors could expropriate
other stakeholders' funds, the limited role
of auditors, the claimed weak link between
executive compensation and company per-
formance, and the roles played by the
market for corporate control and institu-
tional investors in generating apparently
excessive short-term perspectives to the
detriment of general economic perfor-
mance. In particular, the publication of the
Cadbury Report on the Financial Aspects
of Corporate Governance (the Cadbury
Report) has led to attention being paid to
the governance practices of UK compa-
nies.
The Cadbury Committee's terms of
reference were limited to reviewing 'those
aspects of corporate governance specifically
related to financial reporting and account-
ability (para 1.2), and as a result, the main
thrust of its recommendations were direc-
ted towards issues of control and account-
ability. However, since the publication of
the Cadbury Report, there has been con-
Journal of Financial Regulation
and Compliance, Vol. 7, No. 1,
1999, pp. 57-67
© Henry Stewart Publications,
1358-1988
Page 57
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