Regulation and the Evolution of Boards of Directors in Switzerland Over 30 Years

Boards of directors have been subject to unprecedented pressure to change and professionalize in the last decades. We analyze board structures of blue-chip firms in Switzerland between 1988 and 2017. The study shows that exogenous sources, not particularly induced by hard law, have had an important influence on board structures. The increasing demands by regulators, politicians, and proxy advisors led to smaller boards, higher board diversity, and less busy directors. Board committees have widely been established, especially audit, compensation, and nomination committees. Interestingly however, many significant changes occurred before 2002 when corporate governance as a topic became popular in Switzerland and when the Swiss Code of Best Practice has been introduced. The code counts as a milestone for corporate governance in Switzerland. The results therefore also show that even without strict regulations and amendments in company law (hard law) or even without non-binding self-regulatory codes (soft law) on a country-level, firms continuously modernize and professionalize their board of directors. Spillover effects from other companies and other countries as well as pressure by shareholders and proxy advisors are the likely reasons