The history of finance is a field fertile with research, papers, books, and conferences. The reason is clear: studies yield insights into past mistakes, cultural implications over time, and policy development going forward. Yet the history of corporate governance is a field in its infancy. A first conference on the topic convened at the Yale School of Management in November 2009, marking the 400th anniversary of the first-known instance of shareholder rebellion at a publicly-traded enterprise, the Dutch East India Company. Two books resulted: Origins of Shareholder Advocacy, edited by Jonathan Koppell, and Shareholder Rights at 400: Commemorating Isaac Le Maire and the First Recorded Expression of Investor Advocacy. But scholarship since then has been sporadic. Even consensus on the birth of the modern corporate governance movement has been elusive—until a recent archival find. 

Those who pride themselves on financial history will likely contend that it was the UK’s Cadbury Code which broke ground in 1992 with its effort to spell out best practices for corporate boards and investors. But the truth is that Ireland was the first country in the world to publish a national corporate governance code. Few are aware of it today, but the Irish Association of Investment Managers (IAIM) issued that historic document approximately six months before Sir Adrian Cadbury released Britain’s equivalent.

Last December, at the launch of Trinity College Dublin’s Corporate Governance Lab, the authors mentioned this fact to a surprised audience. The event sparked a search to unearth the founding code itself. Surprisingly, that turned out to be a challenge. Many of the individuals who were involved three decades ago did not remember the initiative, and those who did remember could not locate a copy of the code. Of course, it was published when email was in its infancy and there were only about 100 websites in the world altogether.

Google proved to be an unreliable archaeologist: it failed to answer correctly the question of which country was first to have a corporate governance code. Other empirical sources were hardly better. A comprehensive study of corporate governance codes performed by Weil, Gotshal & Manges on behalf of the European Commission in 2002 omitted the document. The seminal Corporate Governance in the European Union by Chris Pierce, a 700 page book that provides a detailed country by country analysis of corporate governance in Europe, was also silent on the matter. Finally, however, corporate governance digging was rewarded when a brief printed document was retrieved from the bowels of the Trinity library.

Dated May 1992, the paper is titled Statement of Best Practice on the Role and Responsibilities of Directors of Public Listed Companies. “In publishing a statement of best practice,” the introduction began, “the Irish Association of Investment Managers (IAIM) is seeking to give the Directors of Public Companies and their advisers a view on the expectations of institutional shareholders on: the composition of Boards of Public Companies; the appointment of Directors; non-executive Directors; Audit Committees; Remuneration Committees; Boards of subsidiary companies; management buy-outs”. 

It is hard today to appreciate just how ground-breaking this stated purpose was in 1992, when the IAIM’s authors wrote the code. Scandals had erupted – exhibit A was the fraud contrived by media oligarch Robert Maxwell – exposing the feebleness of board governance at public companies. In Ireland, there were corporate scandals related to conflicts of interest, involving Greencore and Telecom Eireann. But the IAIM had no models to work from when it developed guidance on best practices. What it recommended from its Dublin headquarters was remarkable both for Ireland and the world at large.

Corporate board chairs, the code asserted, should be separate from the chief executive. Each board should have a majority of independents. The audit committee should be fully independent. Top salaries should be set by independent non-executives. And companies should provide shareholders with fulsome disclosure on all of this. 

Let’s be clear: at the time, many boards had combined chair/CEOs, there were few independent board members, audit oversight was often perfunctory, and executives could be involved in setting their own remuneration levels. In fact, boards were only a step away from traditional men’s clubs. As Lord Boothby famously wrote of common UK practice in 1962, “No effort of any kind is called for. You go to a meeting once a month in a car supplied by the company. You look both grave and sage and, on two occasions, say ‘I agree’, say ‘I don’t think so’ once and, if all goes well, you get GBP 5,500 a year.” The IAIM was done with that. It envisaged a path to a new paradigm of competent, accountable, and vigilant director oversight.

From an international perspective, the Irish code was quickly overshadowed by the release of the report by Britain’s Committee on the Financial Aspects of Corporate Governance on 1 December 1992. This report included the Code of Best Practice (the Cadbury Code). Exactly one year later, in December 1993, the IAIM issued a statement reacting to Cadbury—and finding it wanting. “There are substantial points of agreement between the IAIM Statement and the Cadbury Report,” it first declared, “most notably their emphasis on the importance of non-executive directors and the formation of audit and remuneration committees comprised of non-executive directors.” But the Irish commentators went further, citing “fundamental differences between both publications”.

For starters, the IAIM criticized Cadbury for stopping well short of the new Irish best practice standard that the roles of chair and CEO should be separated. Further, Dublin underscored that Ireland wanted boards to feature a majority of independent non-executive directors, not the Cadbury guidance of just a minimum of three non-executives. 

The Irish perspective on these two points proved remarkably prescient and powerful over time. In fact, subsequent UK codes wound up embracing IAIM positions. Still, the lure of London market standards proved irresistible, and in March 1999 the IAIM published a document endorsing in its entirety what had become known as the UK’s Combined Code. That ended, at least for then, Ireland’s pioneering role in corporate governance.

To be sure, neither the IAIM code nor its Cadbury counterpart addressed perspectives that are now common, such as attention to environmental and social risk factors in corporate sustainability. Nor did they tackle, as many national principles do today, best practice guidance in investor stewardship. However, we look to history in any field to track how far we have come and to mark which paths led to progress and which to dead ends.  

What we can also find in history are seeds of future initiative. Currently, there are conversations happening about whether Ireland should get back in the game, either by creating a new national code or by adding its unique insights to global governance standard setting on breaking issues such as AI. Such conversations can unfold in a context of awareness that Ireland has set the pace in the past. But scholars and policy makers worldwide can now mine this long-buried case to better understand the factors that drove innovation but also braked wider change until much later.