The Belgian Struggle for Corporate Governance Improvements

Abstract

Belgium did not experience major governance collapses in the nineties. However, the country must not but envied. The corporate governance debate started late and experienced mixed developments. Three different corporate governance codes were published in 1998. The publication of these codes enhanced the debate to modernize the outdated Belgian corporate governance rules. It resulted in the publication of the corporate governance law in 2002, a new corporate governance code for listed companies in 2004 and a number of other governance codes. This Lippens Code for listed companies is similar to many other corporate governance codes but contains a number of particular features, like the requirement to disclose a corporate governance charter and a corporate governance chapter.

This paper briefly discusses the Belgian corporate governance developments and it assesses the most important features of the Lippens code and the law related to the code. Next, the paper evaluates the influence of the Lippens code on the corporate governance practices of Belgian firms, studies compliance with the code and addresses the weak relationship between corporate governance compliance and corporate performance. Further, the article measures the 2008 initiative to modernize the Lippens Code. The other codes are briefly dealt with. It concludes that the progress will be insufficient to improve the Belgian corporate governance practices and promote Belgium into premier corporate governance league in Europe.

Keywords: corporate governance, governance code, Belgium, comply and explain, governance and performance

JEL Classification: K22, G30, G34, G38