Comply or Explain Principle in the Context of Corporate Governance in Companies Listed at the Warsaw Stock Exchange

Purpose: The objective of this article is to evaluate to what extent Corporate Governance Statements (CGS) prepared by companies listed on the Warsaw Stock Exchange (GPW) are consistent with Best Practice for GPW Listed Companies. Design/Methodology/Approach: In the first part we applied critical review of subject literature and the monographic method. In the second part, the content analysis method was used, and the basic source material were the CGS for 2018 and 2019. The study group consisted of all WIG20, MWIG40 and sWIG80 companies listed on Warsaw Stock Exchange that submitted their 2018and 2019 reports (280 reports). The CGS were studied using methods including content analysis, comparative and descriptive analysis, and induction. Findings: The analysed CGS helped to answer the question to what extent GPW listed companies pursue the “comply or explain” principle regarding compliance with corporate governance principles and recommendations specified in Best Practice for GPW. The authors investigated whether and to what extent Best Practice is applied and whether the disclosures are useful for the stakeholders. The results indicate that the examined companies follow different approaches to the corporate governance reporting obligations. Practical Implications: Indicating the gap between the expected and the actual scope of disclosures regarding the corporate governance in CGS, which are the primary source of non-financial information for a listed company. Originality/value: The study leads to a general conclusion that the imperfect scope of the reported corporate governance information, as well as the quality and usefulness of the disclosures, consists both in the alignment between Best Practice for GPW Listed Companies and currently applicable regulations in Poland, and in the way, companies choose to follow the said document. The study fills a research gap in non-financial disclosures in annual reports. The paper also indicates directions for further study.