Comply or Explain 원칙 재검토: 기업지배구조 보고서상 핵심지표 준수 여부 신뢰도와 설명 충실도 검증

This study evaluates efficacy and limits of Comply or Explain rule adopted by the Korea Exchange (KRX) in disclosing Korea Corporate Governance Reports. Such rule is a typical type of soft regulation originating from U.K. common law tradition. However, since Korean firms are more familiar with rule-based regulation than principle-based regulation, it remains to be empirically verified whether such system is effective in Korea. We examine in detail 4 critical items reported in 2023 Corporate Governance Reports－namely dividend policy, CEO succession planning, separation of CEO and board chairman, and independent internal audit organization－and determine whether self-disclosures of these items are consistent with the guidelines provided by the KRX. We find that while self-explanations of dividend policy are fairly informative, those of CEO-chairman separation and internal audit organization are not sufficient enough. For example, 98% of firms that do not comply with separation of CEO and chairman failed to provide any further explanation on why they chose to do so. These findings suggest that comply or explain rule has limited effectiveness in Korea and regulators should consider complementing this with some hard rule-based regulation.