Corporate Governance in Finland: The Impact of Globalisation on the Governance of Finnish Listed Companies

Abstract

Since the rise of shareholder values companies have changed their activities to maximise the value created for their shareholders. Such practices have been highly criticised and even pointed out as one of the many reasons for the latest financial crisis. Therefore, Corporate Governance has become a current topic and discussion on which model serves the companies better has been ongoing during the last years.

The goal of the present thesis is to provide additional evidence on the claims that Finnish Corporate Governance model has been moving to align with the Anglo-American model and diverging from the corporate governance models of the other Nordic countries and continental Europe despite their economic importance as trading partners. In order to do so this thesis presents a critical analysis of the Finnish corporate governance backed-up with a 10 years study of the companies listed in Helsinki OMX 25 in subjects of board structure, ownership structure and compliance with the Finnish Corporate Governance recommendations.

The Findings suggest that the recommendations of the Finnish Corporate Governance code of 2015 are more aligned with the Anglo-American model. Furthermore, Finnish code seems to be divergent from the Nordic model and from the continental Europe model known as Two-tier model. The data collected also points in that alignment. The Finnish companies in study have been under an ongoing change that led to the dominance of the one-tier board of directors’ structure, dispersed ownership, increase on foreign ownership which resembles Economies where the Anglo-American model dominates the Corporate Governance. Finally, in regards of compliance with the corporate governance recommendations, Finnish companies have decreased the number of deviations from the code and increased the quality of their explanation. However, that might be in fact an indicator of bad corporate governance.