**Acknowledgements**

The author acknowledges the financial support from the Slovenian Research Agency (research core funding No. P5-0023).

## **Author details**

Mojca Duh

The research findings show that the level of compliance with the codes' recommendations has been increasing in Slovenia. However, as stated in both reports [40, 50], we cannot make a firm conclusion on the actual level of compliance with the CG Code's recommendations. Companies may not disclose all deviations or may find them as unimportant in their attempt to disclose compliance with as many recommendations as possible. That is a way companies should be made aware of the main purpose of the corporate governance code and accompanying 'comply or explain' approach since 'departing from a provision in the code could in some cases allow a company to govern itself more effectively' [32, p. 44]. A non-compliance with the 'best practice' which is accompanying with an explanation of how the alternative approach achieves the goal of the non-adopted recommendation can present significant benefit when creating the governance system that best suits the company's specific circumstances, see [36]. Companies should be aware of the flexibility enabled by the 'comply or explain' approach, and develop a governance system that in the best possible way addresses the company's specifics. The practice of not disclosing all deviations could be a very dangerous one since it can raise doubt about the implementations of the rest recommendations for which a company

Both analyses on disclosures of compliances with the CG Code [40, 50] provide important cognitions on the adoption of the CG Code in Slovenian companies. Findings of such analyses reveal improvements in the governance practice and indicate those areas where changes are required. That is a way such monitoring and analysis should be done on the regular basis. Since we can observe high concentrated ownership in Slovenia [50] and companies with controlling shareholders are found to be less prone to disclose information [26], a regular monitoring of disclosures is of great importance. The EC recommends that public or specialized bodies should regularly monitor corporate governance statements published by companies in order to make 'comply or explain' approach effective [32, Article 19]. Shareholders should also perform effective monitoring in order to encourage good-quality explanations [32, Article 20]. Shareholders should play an active role in improving the quality of explanations in Slovenia as well. A dialogue between shareholders, a management board and a supervisory board is of great importance in the process of creating a suitable governance system. External institutions as professionals in monitoring the quality of disclosures [40] cannot do this. However, such professionals can play an important role in the process of monitoring due to knowledge and expertise they possess.

Reporting on the monitoring results can considerably contribute to better understanding of the code's recommendations among companies, promote debate and thus foster awareness of the underlying issues, see [26]. Regular monitoring of the codes adoption can provide legislators, policy makers and stock exchanges with an important insight into the effectiveness and efficiency of the codes, thus providing basis for developing and updating the recommendations 'in order to address the potential failures of corporate governance mechanisms' [10, p. 222]. Such monitoring can be the opportunity for regulators to 'make the rules less ambiguous' [26, p. 196] as it is the case with the last revision of the Slovenian CG Code that considered the findings of analysis of disclosures of compliances with the Slovenian CG Code from

disclose compliance, see [40].

78 Corporate Governance and Strategic Decision Making

2009 for the 2011–2014 periods.

Address all correspondence to: mojca.duh@uni-mb.si

Faculty of Economics and Business, University of Maribor, Maribor, Slovenia

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**Sustainable Strategic Decision Making**

**Provisional chapter**
