Why the acceptance of voluntary codes on corporate Governance by listed Firms is so rapid?: A theoretical explanation

Implementation of principles of the Codes on Corporate Governance (CCG) is aimed at minimizing

agency conflicts and corporate governance problems in the listed firms. It is, however, observed that

such conflicts and problems occur frequently despite the rapid implementation of the CCG by listed

firms. We developed a theoretical framework to understand why do firms accept and implement the

voluntary CCG principles and what type of behaviours could be expected from top management. We

argue that ccorporations implement the principles and provisions of the voluntary CCG due to (a) their

compliance with societal norms and ethics,(b)coercive isomorphic behavior of managers, (c) the need

for basic integration and adaptive and mimetic behavior of managers, (d) specific needs of

corporations, and (e).strategic vs. self- focused behavior of CEOs and non-executive directors (NEDs).