The 2023 OECD Corporate Governance Factbook

Daniel Blume is the Head of the Corporate Governance Unit, and Mats Isaksson is a Board Member of the Swedish Corporate Governance Board and former Head of Division in the Organization for Economic Co-operation and Development (OECD)’s Directorate for Financial and Enterprise Affairs. This post is based on their OECD memorandum.

A new edition of the OECD Corporate Governance Factbook is now available online. The Factbook contains more than 100 tables and figures with updated comparative information across 49 different jurisdictions. The information, which is provided and vetted with national authorities, covers issues as diverse as ownership structures, regulatory oversight, board duties, shareholder rights and sustainability disclosure.

The Factbook, which is developed and updated by the OECD Corporate Governance Committee every two years, provides policy makers, regulators, market participants and academics with an easily accessible overview of national practices and an opportunity to stay abreast of the evolving corporate governance landscape.

The 2023 edition is divided into four main chapters: 1) global markets, corporate ownership and sustainability; 2) the corporate governance and institutional framework; 3) the rights of shareholders and key ownership functions; and 4) the corporate board of directors. Each chapter offers a narrative overview, which helps to provide a general picture of the main tendencies and variations in approaches taken by different jurisdictions. This is supported by 61 figures and 45 tables, providing comparative information for all 38 OECD members as well as important emerging economies including Argentina; Brazil; the People’s Republic of China; Hong Kong (China); India; Indonesia; Malaysia; Peru; Saudi Arabia; Singapore; and South Africa.

The core information in the Factbook derives from direct country submissions and from the OECD thematic reviews on how jurisdictions address major corporate governance issues. To a large extent, the Factbook follows the structure of the G20/OECD Principles of Corporate Governance, which is the globally recognised international standard for corporate governance. A revised version of the G20/OECD Principles was adopted by the OECD Council at Ministerial Level in June 2023 and by the G20 Leaders at their summit in September 2023. As such, the Factbook also provides an opportunity to follow the evolution of practices across all OECD, G20 and Financial Stability Board member jurisdictions (except Russia) to implement the G20/OECD Principles. All Factbook editions since 2015 can be downloaded from the OECD website site for free (available here).

The 2023 edition of the Factbook has been expanded with information on the new recommendations in the 2023 G20/OECD Principles, including on sustainability, general shareholder meetings, and company groups. Reflecting the increasing attention given to the green transition, the 2023 edition also provides new information on sustainable corporate practices, such as requirements or recommendations for sustainability-related disclosure, the majority of which are set out in mandatory laws or regulations. Below is a selection of highlights excerpted from the different chapters of the Factbook.

Global markets, corporate ownership and sustainability

Effective design and implementation of corporate governance policies require a good empirical understanding of the ownership and business landscape to which they will be applied. The introductory chapter to the Factbook provides context for the data collected in this edition with a global overview of the main developments in equity and corporate bond markets. With almost 44 000 listed companies in the world, global market capitalisation reached USD 98 trillion at the end of 2022, up from USD 84 trillion in 2017. Among key trends identified are a growing share of institutional investor ownership in publicly listed companies; a continuing shift toward leading Asian markets in the number of listed companies and initial public offerings (IPOs); an increasing proportion of capital market financing coming from secondary public offerings (SPOs); and a long-term growth trend in nonfinancial firm corporate bond issuances (although this eased somewhat in 2021-22).

Figure 1 below provides a picture of the size of the key markets and regions according to the number of listed companies and market capitalisation for all listed companies. The United States remains the largest market by market capitalisation, while Asia has the highest number of listed companies.

Figure 1. Universe of listed companies, end 2022

Source: 2023 OECD Corporate Governance Factbook

The opening chapter of the Factbook also analyses corporate sustainability-related policies and practices and reveals how, reflecting increased investors’ attention to sustainability issues, all surveyed jurisdictions have established relevant provisions, specific requirements or recommendations with respect to sustainability-related disclosure. The G20/OECD Principles recognise sustainability-related disclosure as essential to ensure the efficiency of capital markets and to allow shareholders to exercise their rights on an informed basis. A requirement in the law or regulations has been established in nearly two-thirds of the jurisdictions, while a requirement in listing rules has been established in 8% of the jurisdictions (Figure 2, Panel A). In 24% of the jurisdictions, sustainability-related disclosure is a recommendation provided by codes or principles, including frameworks set by the regulator or stock exchange following a “comply or explain” approach.

As a result of existing sustainability-related disclosure provisions, along with the growing consideration investors are devoting to sustainability-related information, almost 8 000 companies listed in 73 markets globally disclosed sustainability information in 2021. These companies represent 84% of global market capitalisation, ranging from 66% in China where sustainability-related disclosure is only recommended to 95% in Europe. Notwithstanding, these companies represent only 19% of all listed companies globally, ranging from 17% in China to 34% in Europe (Figure 2, Panel B).

Figure 2. Sustainability-related disclosure with 2021 information

Source: 2023 OECD Corporate Governance Factbook.

Only half of jurisdictions have explicit provisions on board responsibilities for sustainability-related policies. Newly collected information on regulatory frameworks on ESG rating and data providers indicate that only a few jurisdictions, mostly within the EU, have so far adopted such frameworks.

The corporate governance and institutional framework

The quality of the institutional, legal and regulatory framework is an important foundation for implementing the G20/OECD Principles, requiring effective supervision and enforcement that market participants can rely on. Against this background, Chapter 2 of the Factbook highlights how reforms in corporate governance remain a priority and were implemented in over 70% of Factbook jurisdictions in 2021-22. Corporate governance codes also continue to play an important role: almost all jurisdictions have a national corporate governance code or equivalent instrument, with varied approaches for implementing them. More than two-thirds of jurisdictions also publish a national report on companies’ adherence to these codes – an increasingly common practice in recent years (see Figure 3).

Figure 3. National reporting on adherence to corporate governance codes

Note: Based on 44 institutions in 34 jurisdictions that prepare national reports. 2023 OECD Corporate Governance Factbook.

The Factbook also offers information on the lead regulatory institution for corporate governance of listed companies in each jurisdiction and their governance arrangements. Overall, budget autonomy is the most common safeguard underpinning authorities’ independence (60% of regulators), while 17% of regulators still depend exclusively on the government’s budget. All but a few jurisdictions have established governing bodies to oversee their market supervisors, generally with specific criteria for appointments and fixed terms usually ranging from three to six years.

The rights of shareholders and key ownership functions

The G20/OECD Principles state that the corporate governance framework shall protect and facilitate the exercise of shareholders’ rights and ensure equitable treatment of all shareholders. The third chapter of the Factbook highlights a significant increase in Factbook jurisdictions allowing companies to issue multiple voting shares, departing from the “one share one vote” proportionality principle and displaying a diversity of frameworks. The chapter also shows considerable evolution in frameworks for the review of related-party transactions. Nearly all jurisdictions now require both periodic and immediate disclosure of related-party transactions. Board approval of significant transactions is also required or recommended in all but eight jurisdictions, usually with the abstention of related board members and often with a special role for the audit committee or independent directors. Shareholders also may play a role in a majority of jurisdictions, for example, for transactions above certain thresholds.

The third chapter offers new data on the legal frameworks for conducting virtual and hybrid shareholder meetings. As of the end of 2022, a large majority of jurisdictions had rules or recommendations on virtual and/or hybrid shareholder meetings with safeguards for ensuring equal access to information and effective participation of all shareholders in line with the revised G20/OECD Principles (Figure 4).

Figure 4. Legal frameworks for virtual and hybrid shareholder meetings (no. of jurisdictions)

Source: 2023 OECD Corporate Governance Factbook.

The rise in institutional ownership of publicly listed companies (averaging 44% of equity globally) is reflected in the increasing use of investor stewardship codes together with disclosure of voting policies and voting records. In comparison to institutional investors, regulations on proxy and other advisory services are still less common. Another common feature related to company ownership, with implications for shareholder rights, are company groups. The Factbook includes new findings on how jurisdictions define company groups in their legal frameworks and what elements must be disclosed. To address their complexity, more than 80% of jurisdictions require public disclosure of a range of elements related to company group structures, their ownership and intra-group activities.

The corporate board of directors

The G20/OECD Principles recommend that the corporate governance framework ensures the strategic guidance of the company by the board and its accountability to the company and the shareholders. The final chapter of the Factbook offers information on board structures, board independence and board-level committees, as well as risk management and implementation of internal controls. Jurisdictions explicitly requiring or recommending the establishment of sustainability committees are rare. Concerning external audit, the Factbook confirms shareholders’ primary responsibility for appointing and/or approving the external auditor, although the board’s involvement is also increasingly common to assist the shareholders’ decision.

Along with information on board nomination, election and remuneration, the final chapter addresses the gender composition of boards and senior management, on which jurisdictions have adopted a range of approaches to promote greater diversity, not only on gender, but also in terms of board member backgrounds and other characteristics. Three-fifths of jurisdictions mandate disclosure of the gender composition of boards, whereas only approximately 30% mandate it for senior management. Mandated quotas and/or voluntary targets have yielded positive results and, in this effort, complementary or alternative measures are also foreseeable and have generated positive outcomes (see Figure 5 below).

Figure 5. Aggregate change in the percentage of women on boards

Source: OECD Corporate Governance Factbook.

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