Transparency and corporate governance in Maltese listed entities : an analysis

Abstract

PURPOSE: The objectives of this study are to examine whether a lack of corporate transparency is a relevant feature in the corporate governance of Maltese listed entities and, if so, to assess the possible reasons for such a corporate stance and its implications. DESIGN: In order to achieve these research objectives, a predominantly qualitative mixed methodology was adopted. A total of 13 semi-structured interviews were conducted with members of Maltese listed entities and audit firm representatives. Moreover, an examination of the corporate governance statements, in particular, the non-compliance part was held for the three consecutive years between 20152017. FINDINGS: This study finds a general lack of corporate transparency in corporate governance reporting. The tendency is for several Maltese listed entities to comply only at a superficial level with the principles of the Code and thus fail to reap the benefits of sustaining a good governance structure and an appropriate level of corporate transparency. This stems out both from, the inadequate involvement of the regulator and company shareholders, who are not exerting ample pressure on the company’s management as well as, from the innate dynamics of an island-state wherein strong perceptions persists as to the sensitivity of divulging corporate matters. CONCLUSIONS: This study concludes that at present some Maltese listed entities are still facing difficulties in achieving a legitimate balance between corporate confidentiality and corporate transparency and therefore more detailed regulatory guidelines on corporate transparency are required. In addition, increased awareness and education on corporate governance and transparency among both companies and the shareholders may also improve the situation. IMPLICATIONS: This study hopes to raise awareness both on the need to improve corporate transparency practices in corporate governance reporting as well as on the need to enhance education on such practices among Maltese companies and their shareholders. The recommendations being forwarded are therefore meant for companies to improve their corporate disclosures and for the regulator to explore ways of becoming more involved in this effect.