We have now published the results of our QCA/UHY Hacker Young Corporate Governance Behaviour Review. Done in partnership with Top 20 UK accountancy firm UHY Hacker Young, we benchmarked corporate governance disclosures made by 100 small and mid-size quoted companies against the minimum disclosures outlined in our Corporate Governance Code for Small and Mid-Size Quoted Companies.
Our review found that there were varying levels of corporate governance disclosure and behaviour, but has highlighted some key areas where improvement is needed. Key findings include:
- While 81% of companies analysed referred to following a specific code, only 3% disclosed how the application of that code supports the company's long-term success and its strategy for growth.
- Only 38% of small and mid-size quoted companies followed recommendations to explain how the businesses’ risks align with the strategy of the company;
- The majority (68%) of remuneration committee reports reviewed explained how the company’s remuneration policy and practice align with the company’s strategy;
- Only 31% of companies provided an explanation to shareholders of how the objectivity and independence of their auditors is safeguarded;
- Just under half (43%) of companies explained to shareholders the independence of non-executive directors; and
- Just 17% of companies followed best practice by explaining how their audit committee dealt with risk.
The review found that areas where there are good levels of disclosure tend to focus on the provision of standing information. Conversely, small and mid-size quoted companies tend to struggle with more complex disclosures, such as a summary of board evaluation procedures, the results of the evaluation and any action planned or taken.
The report also offers some top tips for companies for this reporting season, drawn from discussions with institutional investors about the review.
We hope that this review will help quoted company directors to communicate with investors better. As ever, we appreciate your feedback on how to improve this research and any other research we do – please email us. Of those companies without a separate risk committee at board level