**1. Introduction**

The adoption of best practice codes has been one of the most influential trends in corporate governance in the last 20 years (Aguilera and Cuervo-Cazura 2004; Zattoni and Cuomo 2008; Cuomo et al. 2016), being noted in both developed and emerging economies. Conceptually, codes of best practice offer self-regulation for companies (Hooghiemstra and van Ees 2011) and aim to resolve the inherent principal–agent conflict, strengthen monitoring tools over management and limit the power of corporate officials (Pritchett 1983). As a result, corporate governance guidelines reduce information asymmetry, empower shareholders, and lower agency costs (Chang 2018). Despite institutional differences across corporate governance regimes, the code provisions remain similar (Cicon et al. 2012; OECD 2015). In practice, the set of recommendations on board work, and the structure of executive remuneration and standards of transparency have been viewed as a systemic response to corporate governance inefficiencies identified during disruptive corporate scandals (Aguilera et al. 2009; Krenn 2015).

Prior studies identify the value added by the adoption of best practice. The positive effects for those companies complying with corporate governance principles relate to increased investor trust and lower risk (Durnev and Kim 2005). With greater transparency, investors are more interested in allocating their funds in company stocks. Compliance also leads to enhanced company reputation, lower cost of capital, better performance, higher return on investment, and higher market valuation (Mazotta and Veltri 2014; Kaspereit et al. 2017). Nevertheless, despite the belief in the positive effect of higher compliance, scholars have addressed limitations in the transfer of Anglo-Saxon corporate governance guidelines to countries having different institutional environments and company characteristics (Chen et al. 2011). The criticism of the one-size fits-all approach indicates the structural differences in ownership structure, cultural norms, and socializing patterns, which may result in problems of code implementation, such as an instrumental approach to adoption (Fotaki et al. 2019), manipulation (Okhmatovskiy and David 2012), and decoupling (Martin 2010; Sobhan 2016). These issues may reduce compliance benefits and limit the effect of higher valuations.

In countries characterized by concentrated ownership and wedge between control and cash-flow rights, the conflicts between majority and minority shareholders become the prime concern of corporate governance (La Porta et al. 1999; Bennedsen and Nielsen 2010; Hamadi and Heinen 2015; Huu Nguyen et al. 2020). While the flexibility of the codes and the universalism of best practice enable the adoption of code guidelines for a concentrated ownership environment, in compliance terms, it remains the decision of powerful blockholders as to whether they constrain themselves in exerting their power over the company and their willingness to share "control of control" (Perezts and Picard 2015). The gap between "formal adoption of structures and their actual daily use" (Perezts and Picard 2015, p. 833) or the lack of congruence between enacted values and espoused values (Fotaki et al. 2019) are more likely to occur in countries with insufficient investor protection, inadequate transparency standards, and weak institutions. These conditions, accompanied with ownership concentration, happen to materialize in developing countries, as well as emerging and post-transition economies (Huu Nguyen et al. 2020). Implementing codes of best practice in the context of what is termed "emerging governance" reveals a different logic, since "arrangements adapt and evolve over time", as a result of "the co-habitation of different institutional, regal and ownership tradition and assumptions from more established governance models" (Mahadeo and Soobaroyen 2016, pp. 739–40).

In this paper, we aim to add to the existing literature on corporate governance compliance in developing and emerging markets (Outa and Waweru 2016; Sarhan and Ntim 2018), in addition to smaller economies (Chang 2018), and to deliver insights on the implementation of best practice codes in a post-transition and post-communist economy (Okhmatovskiy and David 2012; Albu and Girbina 2015). In this light, we pose a question concerning the market valuation effect for the implementation of best practice codes. Drawing upon agency theory, we address the limitations of best practice codes in an emerging governance context, emphasizing the role of concentrated ownership. While the existing literature emphasizes that the prime objective of best practice implementation lies in creating conditions to attract investors to invest funds (Chang 2018), the reality of operating in the context of concentrated ownership may offer different incentives for blockholders (Chen et al. 2011). Compliance per se may be seen in terms of a cost, a loss of power, or a threat from the exposure of internal structure to the scrutiny of the general public. We study the link between compliance practice and company value in relation to ownership concentration and ownership by distinct shareholder types, including financial, individual, industry, CEO, and state.

The contribution of the paper is twofold. Firstly, we provide much-needed evidence on longitudinal compliance practice in an unfavorable environment of insufficient investor protection, concentrated ownership, and a hierarchy-based corporate governance system under a post-communist legacy. We study the scope and dynamics of compliance with best practice in the context of reemerging trust and civic society, yet where institutions and the legal system are still insufficiently effective. Secondly, developing further the approach proposed by Chen et al. (2011) on the limitations of best

practice adoption in emerging markets, we analyze the relations between compliance practices and company value.

The remainder of this paper is organized as follows. First, we outline the concept of corporate governance best practice by recourse to agency theory, which explains the motivation for compliance. We explain practices by listed companies in the context of emerging governance, concentrated ownership, and a hierarchy-based control system. Then, we present prior studies on the relations between corporate governance compliance and company value and performance. This is followed by a presentation of our research design, presenting our study sample, data collection, descriptive statistics, and econometric models. Our analysis is based on a sample of 155 companies listed on the Warsaw Stock Exchange in the years 2006–2015. The period of 2006–2015 was chosen deliberately, due to the relative stability of corporate governance code recommendations. Our findings suggest that implementing new corporate governance practice is an incremental process. Descriptive statistics are consistent with prior studies on emerging and post-transition countries and demonstrate a slow but steady increase in the number of complying companies, though still lagging behind well-established economies (Albu and Girbina 2015; Chang 2018). The results of the constructed models reveal a statistically significant and negative relationship between all three constructed measures of compliance and firm value as measured by Tobin's Q. We discuss implications for theory and practice and formulate suggestions for further research in the final sections.
