Strengthening Corporate Governance and Financial Reporting Through Regulatory Reform: A Comparative Analysis of Greek Laws 3016/2002 and 4706/2020

Abstract

This study explores how corporate governance reforms can enhance financial reporting quality and organizational transparency, focusing on Greece’s transition from Law 3016/2002 to Law 4706/2020. The legislative reform aimed to modernize governance structures, align national practices with international standards, and strengthen investor protection in a post-crisis economic environment. Moving beyond a simple legal comparison, the study examines how Law 3016/2002’s formal compliance model contrasts with Law 4706/2020’s more substantive accountability framework. We hypothesize that Law 4706/2020 introduces substantively stronger governance mechanisms than its predecessor, thereby improving transparency and investor protection, while compliance with the new law imposes materially greater administrative and financial burdens, especially on small- and mid-cap firms. Methodologically, the research employs a narrative literature review and a structured comparative legal analysis to assess the administrative and financial implications of the new law for publicly listed companies, focusing on board composition and diversity, internal controls, suitability policies, and disclosure requirements. Drawing on prior comparative evidence, we posit that Law 4706/2020 will foster governance and disclosure improvements, enhanced oversight, and clearer board roles. However, these measures also impose compliance burdens. Due to the heterogeneity of listed companies and the lack of firm-level data following Law 4706/2020’s implementation, the findings are neither fully generalizable nor quantifiable; future quantitative research using event studies or panel data is required to validate the hypotheses. We conclude that Greece’s new framework is a critical step toward sustainable corporate governance and more transparent financial reporting, offering regulators, practitioners, and scholars examining legal reform’s impact on governance effectiveness and financial reporting integrity.

1. Introduction

The introduction of Law 4706/2020, which governs corporate governance for joint-stock companies with securities listed on the Athens Stock Exchange, represents a significant regulatory shift from the previous framework established by Law 3016/2002. This new legislation introduces mandatory provisions, creating a regulatory environment that poses compliance challenges for Greek-listed companies. Prior to this, companies operated under a “soft law” system, which allowed greater flexibility but offered minimal oversight (Florou & Galarniotis, 2007).

Corporate governance frameworks play a critical role in shaping governance structures and the quality and transparency of financial reporting. Effective governance structures, such as board independence, audit committees, and clear accountability frameworks, ensure that financial statements accurately reflect a company’s economic reality, fostering investor trust and improving market stability (Bebchuk & Weisbach, 2010). Robust corporate governance reduces the risk of financial misreporting and fraud, while enhancing overall corporate transparency and accountability (Florou & Galarniotis, 2007; Antoniadis et al., 2019; S. Paganou et al., 2024b). Regulatory reforms such as those examined in this study aim not only to align financial reporting practices with international accounting standards but also to strengthen the governance structures essential for sustainable corporate growth, thereby enhancing comparability and consistency across jurisdictions (Aguilera & Cuervo-Cazurra, 2009).

However, initial observations reveal critical discrepancies between corporate governance theory and practice. Rather than fostering a culture of robust governance and stakeholder engagement, the previous Law emphasized formal compliance, resulting in ambiguities, gaps, and interpretive weaknesses that undermined its effectiveness (Spanos, 2005).

The transition from Law 3016/2002 to Law 4706/2020 in Greece represents not only a legislative update but also a conceptual shift in the philosophy underpinning corporate governance. Whereas the earlier framework emphasized formal compliance, the new law advocates for substantive governance—prioritizing meaningful oversight, strategic accountability, and enhanced disclosure requirements. This shift mirrors broader international trends towards principles-based governance, designed to provide more flexible yet stringent regulatory guidance, aligning the Greek corporate environment with European Union directives and global best practices (EU Commission, 2021).

This study addresses the scientific problem of evaluating the efficacy of Law 4706/2020 in resolving the shortcomings of its predecessor, specifically its ability to strengthen governance structures, enhance stakeholder engagement, and support sustainable corporate performance. More specifically, this analysis investigates whether Law 4706/2020 introduces substantively stronger corporate governance mechanisms compared to Law 3016/2002, with the potential to enhance transparency and investor protection. It also examines whether the new law entails materially greater administrative and financial compliance burdens, particularly for small and mid-capitalization firms. These dual aims are articulated through two guiding hypotheses: (1) that the recent reform strengthens governance quality relative to earlier frameworks, and (2) that its implementation imposes a disproportionate cost burden on smaller issuers. By doing so, the study contributes to the broader post-crisis corporate governance literature, where national legal reforms intersect with EU regulatory convergence, investor expectations, and institutional constraints specific to the Greek market context. This inquiry also contributes to the broader post-crisis corporate governance discourse, where legislative reforms have been used to restore investor confidence, improve transparency, and align national practices with supranational standards (e.g., EU directives). In line with studies analyzing governance reforms in the aftermath of the 2008 financial crisis and the Eurozone sovereign debt crisis (Hopt, 2011), this paper examines how Greece has sought to reestablish market trust and regulatory credibility through Law 4706/2020. The analysis positions Greece’s experience within this wider trend of convergence and institutional upgrading across the European Union (2020).

The remainder of this paper is structured as follows. Section 2 provides a comprehensive literature review, contextualizing the study within existing research on corporate governance, governance structures, and financial reporting. Section 3 outlines the research methodology, detailing the comparative analysis employed. Section 4 presents the results, highlighting key differences between the two regulatory frameworks and discussing their implications for corporate transparency and accountability. Finally, Section 5 concludes by summarizing the study’s key findings, outlining practical implications for policymakers and corporate stakeholders, and suggesting avenues for further research.

2. Related Background

2.1. Literature Search Protocols

A structured search of Scopus and Web of Science (2000–2025) used keywords like “Greek corporate governance,” “Law 3016/2002,” “Law 4706/2020,” and “board diversity Greece.” Only sources focusing on Greek listed companies or comparing Greek regulations were included; others were excluded. Selected works were evaluated for relevance, credibility, and contribution to understanding Greek corporate governance.

2.2. Corporate Governance in Greece

Corporate governance in Greece has now come of age, evolving from the tentative adoption of voluntary principles to a mature, disclosure-driven, and enforcement-oriented framework. Corporate governance is a critical field of research and practice because it underpins transparency, accountability, and investor confidence across global capital markets. In Greece, the regulatory journey reflects a broader ambition to align domestic practices with international standards while accommodating local market idiosyncrasies and ownership structures.

The turning points of this journey are closely linked to exogenous shocks. The speculative events in the Greek capital market during 1999 (Spanos, 2005) along with the global stock-market turmoil of 2002, which reverberated through the Athens Stock Exchange, eroded investor trust and exposed weaknesses in shareholder protection (Capital Market Commission, 2002; Porta et al., 1998, 1999). Governments across Europe responded by strengthening oversight, fueling the corporate-governance movement (Gelter, 2016). In the Greek context, the Hellenic Capital Market Commission issued a set of binding principles for listed companies, echoing similar initiatives launched in other EU jurisdictions in 1999 (Aguilera & Cuervo-Cazurra, 2009). Yet the domestic framework remained fragmented, and investor protection lagged behind advanced markets, thereby setting the stage for the sequential reforms analyzed below.

2.3. Global Governance Codes: Foundations Influencing Greek Regulation

Since the early 1990s, a series of landmark governance initiatives has established the normative link between board oversight and the credibility of financial statements. Beyond their global impact, these initiatives served as pivotal reference points for Greek policymakers when designing the domestic corporate-governance framework that culminated in Laws 3016/2002 and 4706/2020. The Report of the Cadbury Committee (1992) in the United Kingdom introduced the principle that directors are collectively responsible for presenting “a balanced and understandable assessment of the company’s position”—effectively tying board accountability to external reporting quality. A decade later, the Sarbanes-Oxley Act (2002) in the United States codified this connection in hard law by making chief executives and chief financial officers personally liable for material misstatements, while strengthening audit-committee independence (Sarbanes-Oxley Act, 2002).

At the supranational level, the OECD Principles of Corporate Governance (OECD, 2004) frame transparent disclosure and timely financial reporting as key pillars of a well-functioning market. Subsequent national codes—for example, the German Corporate Governance Code (Cromme, 2005) and (France, 2019)—have adopted similar disclosure-centric orientations. Comparative studies show that jurisdictions embracing these principles tend to experience lower earnings-management incentives and narrower bid-ask spreads, signaling higher information quality (Aguilera & Cuervo-Cazurra, 2009).

In emerging markets, the adoption of global codes often proceeds in stages: an initial “formal compliance” phase centered on basic disclosure rules, followed by a “substantive governance” phase that embeds board independence, audit-committee effectiveness, and integrated sustainability reporting (Florou & Galarniotis, 2007). This two-phase trajectory provides a useful analytical lens for the Greek case examined in this study.

Table 1. Comparative Analysis of Corporate Governance Regulations.

Document Title	Publication Year	Country	Nature (Law/Code)	Source
Organization for Economic Co-operation and Development Principles and Guidelines	2004	International	Voluntary Code	OECD (2004)
Turnbull Report: Internal Control Guidance for Directors on the Combined Code	2005	United Kingdom	Voluntary Code	Kendrick (2000)
Cadbury Report: The Financial Aspects of Corporate Governance	1992	United Kingdom	Voluntary Code	The Report of the Cadbury Committee (1992)
Sarbanes-Oxley Act	2002	United States of America	Law	Sarbanes-Oxley Act (2002)
Corporate Governance Principles in Greece	2002	Greece	Law	Mertzanis (2001)
Greek Law 3016 on Corporate Governance	1999	Greece	Law	Bank of Greece (2002)
German Corporate Governance Code	2002	Germany	Voluntary Code	Cromme (2005)
Loi PACTE (Action Plan for Business Growth and Transformation)	2019	France	Law	France (2019)
Japanese Corporate Governance Code	2015	Japan	Voluntary Code	Corporate Governance in Japan (2023)
King Report on Corporate Governance	1994	South Africa	Voluntary Code	Institute of Directors in Southern Africa (1994)
Canadian Multilateral Instrument 58–101	2005	Canada	Law	Ontario Securities Commission (OSC) (2023)
Australian Securities and Investments Commission Act	2001	Australia	Law	Office of Parliamentary Counsel (2017)
Companies Act 2006	2006	United Kingdom	Law	Participation (2006)

Note: Overview of international corporate governance codes and legislation that have influenced the Greek regulatory framework, highlighting legal origin, country of implementation, and thematic focus.

synthesizes these key global initiatives, highlighting their year of enactment, legal nature, and primary focus on governance–reporting linkages.

Taken together, these global benchmarks created the normative and technical blueprint upon which Greece’s legislators modelled successive reforms. Unlike comprehensive frameworks in countries with advanced capital markets—such as the United States’ Sarbanes-Oxley Act (2002) or the UK’s Cadbury Report (The Report of the Cadbury Committee, 1992)—the first Greek corporate-governance statute, Law 3016/2002, was comparatively fragmented and only partially aligned with the organizational needs of domestic firms (Bank of Greece, 2002; European Securities and Markets Authority, 2024). The absence of binding recommendations from the Capital Market Committee (Hellenic Capital Market Commission, 1999) further underscored these inadequacies.

Table 1 already illustrates the breadth of global practices: the Sarbanes-Oxley Act imposes rigorous, enforcement-driven compliance in the United States, whereas voluntary codes such as the German Corporate Governance Code (Cromme, 2005) and the Japanese Corporate Governance Code (Financial Services Agency & Tokyo Stock Exchange, 2015) stress flexibility and ‘comply-or-explain’ adaptability. Japan’s reforms progressively integrate Western-style shareholder rights while retaining traditional keiretsu structures, and South Africa’s King Report (Institute of Directors in Southern Africa, 1994) adopts a stakeholder-inclusive philosophy that elevates ethical leadership and sustainability beyond narrow shareholder primacy. France (2019) embeds corporate-social-responsibility (CSR) imperatives and long-term value creation—dimensions that, until recently, remained under-developed in Greece.

Against this backdrop of increasingly sophisticated international standards, Greece’s minimalistic early framework set the stage for a more ambitious overhaul, culminating in Law 4706/2020. Building on the international landscape and recognizing domestic shortcomings, the next subsection reviews the evolution of Greek regulation prior to 2020 and the impetus for comprehensive reform.

2.4. Greek Governance Framework Before 2020

The 1999 capital market events exposed the weaknesses in the existing regulatory framework and corporate governance practices in Greece, prompting the need for reform (Spanos, 2005). Since 1920, companies had operated under Law 2190/1920 (the original Code of Societés Anonymes), which established basic S.A. governance rules but lacked modern transparency and enforcement provisions. The introduction of Law 3016/2002 was a response to address these issues and improve corporate governance standards in the country, and constituted Greece’s first binding attempt to codify corporate-governance practices for listed companies. The statute emphasized disclosure of board composition and the presence of independent directors as mechanisms for reducing conflicts of interest and improving objectivity (Vasileiou, 2007). It also sought to enhance shareholder participation by mandating timely and accurate information flows (Papadopoulos, 2005) and required disclosure of executive remuneration to curb potential abuses (G. Nikolaidis, 2009).

Empirical evidence, however, revealed limited early uptake. Tsipouri and Xanthakis (2004), analyzing 120 firms on the Athens Stock Exchange, found that implementation lagged behind OECD guidelines. Although some companies increased board size and added at least one independent director, overall governance structures remained weak, and a transparent environment was not established (Lazarides, 2010).

The law soon drew criticism for its brevity—just eleven articles spanning five pages (Alexopoulos et al., 2023)—and for insufficient coverage of key areas such as transparency rules, board independence criteria, internal-control systems, and minority-shareholder protection. In 2008, Law 3693/2008 tried to strengthen oversight by requiring listed S.A.s to appoint audit committees and to disclose ownership structure and governance details, though it was later repealed by Law 4449/2017. Crucially, the framework relied on formal compliance without strong enforcement provisions. Also, in 2010, Law 3884/2010 transposed the EU Shareholders’ Rights Directive (2007/36/EC) into Greek law, introducing electronic voting and 21-day advance disclosure of meeting materials. Surveys conducted in 2006–2007 illustrate these gaps: average compliance on board composition reached 68.2 per cent, yet remuneration disclosure registered only 2.1 per cent; internal control and financial-reporting practices stood at 17.3 per cent, while shareholder-rights and transparency scores were 57.8 per cent and 69.5 per cent, respectively (Hellenic Capital Market Commission, 2016).

Collectively, these weaknesses underscored the need for a more comprehensive, enforcement-oriented regime. Beyond the academic critiques, several contextual factors amplified the pressure for reform. First, the 2008–2012 sovereign-debt crisis exposed structural governance failings in many listed firms, leading to a series of high-profile restatements and delistings that eroded investor confidence. Second, in 2014 Regulation 537/2014 (the EU Audit Regulation) was transposed via amendments to Law 3016/2002 and later fully codified in Law 4706/2020, mandating independent audit committees, auditor rotation, and stricter auditor-independence rules. In 2017, Directive 2017/828 (Shareholders’ Rights II) and Regulation 2017/1131 strengthened remuneration and voting-disclosure requirements and mandated iXBRL tagging of annual reports; these provisions were incorporated into Law 4706/2020 (Law Alert, 2020). Successive European Union directives—notably the Shareholder Rights Directive (2007/2017) and the Audit Regulation (2014)—raised the regulatory baseline across Member States, making Greece’s minimalist framework increasingly anomalous. Third, in 2018, Law 4548/2018 replaced the old Code (Law 2190/1920) and modernized general meeting procedures, board-composition rules, and shareholder rights. Repeated recommendations by the Hellenic Capital Market Commission (HCMC) highlighted the absence of rigorous internal-control testing and the need for gender diversity on boards, aligning with trends documented in the German and French codes cited earlier. HCMC Circular 60/2020 sets out general criteria and procedures for director suitability, including qualification profiles and conflict-of-interest policies, to improve board quality ahead of the Law 4706/2020 overhaul.

From a market perspective, empirical work by Florou and Galarniotis (2007) indicates wider bid–ask spreads for Greek stocks relative to peers in more stringent jurisdictions, attributing the differential partially to perceived disclosure risk, suggesting that, ceteris paribus, a more demanding regime should narrow spreads over time. In parallel, Vafeas (1999) and Shivdasani and Yermack (1999) demonstrated that weak nomination and remuneration mechanisms—features largely absent from Law 3016/2002—correlate with lower operating performance, findings later echoed in the Greek setting (Nerantzidis & Filos, 2014; Zhou et al., 2018). Sunny and Hoque (2025) highlight that an overemphasis on board independence, can result in the appointment of independent directors who lack firm-specific knowledge, thereby impairing strategic decision-making and diminishing performance outcomes.

Taken together, the combination of domestic shortcomings, crisis-induced scrutiny, and EU convergence created the political momentum for the far-reaching overhaul introduced by Law 4706/2020, which is examined in the next subsection (Figure 1).

2.5. Conceptual Shift: Law 4706/2020

To remedy the cumulative weaknesses of Law 3016/2002—and to restore market confidence after the sovereign-debt crisis—Greece enacted Law 4706/2020. The reform, promoted amid the COVID-19 shock, aligns Greek rules with the Shareholder Rights Directive II, the Audit Regulation 2014, and other EU initiatives, shifting the national model away from box-ticking compliance toward outcome-oriented governance (N. Nikolaidis, 2020; Hellenic Corporate Governance Council, 2021).

The statute introduces an integrated package of measures. First, it obliges boards to adopt a formal suitability policy operationalized by Circular 60/2020 of the Capital Market Commission. Second, it mandates fully independent audit, nomination, and remuneration committees, thereby reducing executive entrenchment and reinforcing monitoring functions long associated with stronger performance (Shivdasani & Yermack, 1999; Elmagrhi et al., 2018; Bekiris & Doukakis, 2011). Third, firms must establish autonomous Internal-Audit, Compliance, and Risk-Management units that report directly to the board, mirroring SOX-style assurance mechanisms (Kalogiannidis et al., 2023). Fourth, every issuer must adopt a recognized Corporate Governance Code under a stringent comply-or-explain regime, embedding soft-law flexibility within a hard-law scaffold (Sari, 2023).

Transparency is further enhanced by detailed disclosure requirements covering governance practices, director biographies, remuneration frameworks, and shareholder-engagement policies (Zouridakis, 2016; PWC, 2014). These heightened disclosures are expected to elevate the quality of financial reporting, narrowing information asymmetry and curbing accruals-based earnings management (Bekiris & Doukakis, 2011). These reforms collectively enhance corporate governance quality, which refers to the extent to which structures and practices foster transparency, accountability, shareholder protection, and effective oversight. It is typically assessed through factors such as board independence, the presence of audit and nomination committees, internal controls, and disclosure standards (Brown et al., 2011). Empirical studies link strong governance frameworks with improved firm performance and reduced agency costs, particularly in contexts where legal enforcement is variable, such as emerging markets (Porta et al., 1998).

Beyond narrative transparency, the statute creates a direct legal bridge to financial reporting integrity. Articles 15–16 require each issuer to publish, alongside the annual financial statements, a formal Statement on the Internal Control and Risk-Management System certified by the board (Dritsas, 2020). The board must attest that the statements “present fairly, in all material respects, the financial position and results of the company,” mirroring CEO/CFO certification under Sarbanes-Oxley. Failure to file an accurate statement constitutes a substantive breach subject to the sanctions outlined in Article 24.

Coupled with the mandatory independence of the audit committee—which now oversees both statutory audit quality and the effectiveness of internal controls—these provisions tighten the feedback loop between governance structures and financial-reporting reliability.

An important clause that Law 4706/2020 brought at an organizational level, is the introduction of Greece’s first binding quota on board gender diversity, requiring at least 25% female directors and annual disclosure of gender representation. International evidence suggests that such diversity can strengthen monitoring. However, some studies question whether gender diversity leads to improved firm performance, particularly in patriarchal or concentrated ownership environments (Cole, 1997; Aldrich, 1989). Additionally, Sunny and Hoque (2025) point out that diversity mandates may inadvertently foster tokenism, where the inclusion of female directors is symbolic rather than substantive, failing to translate into effective oversight and even disrupting board cohesion. Further critiques of RNC-driven governance highlight structural drawbacks that may undermine board effectiveness.

ESG oversight and reporting quality, positioning the quota as both a governance lever and a transparency tool. However, the effectiveness of ESG-related measures remains contested. While such disclosures can signal ethical commitment and improve board accountability, several studies argue they are often adopted for reputational reasons, resulting in symbolic compliance rather than meaningful change (Nyantakyi et al., 2023; Alhamar et al., 2023). Their impact is frequently context-specific, with limited performance improvements in the short term (Nnedu, 2025), though positive associations with investor trust and efficiency have been observed in more mature markets (Veeravel et al., 2024). In Section 4, we will discuss further how this requirement operates alongside the law’s other oversight mechanisms, while in Section 5 we will analyze the anticipated benefits, and context-specific limitations, and compliance costs for Greek issuers.

Robust penalty provisions back these obligations. Article 24 authorizes the Hellenic Capital Market Commission to impose (i) reputational sanctions, such as public reprimands; and (ii) pecuniary fines up to EUR 3 million or 5 percent of annual turnover on legal entities, and up to EUR 3 million on natural persons—including board and audit committee members—for non-compliance (Law Alert, 2020; Topalidis, 2020). Sanction severity is calibrated to the gravity, duration, and market impact of the breach, as well as remedial action and cooperation during investigations (Dritsas, 2020). This enforcement regime shifts Greece decisively away from the soft-law culture that characterized Law 3016/2002.

Although the reform promises improved accountability and lower information risk, it also imposes non-trivial compliance costs—especially on small-cap firms that must recruit independent directors, formalize internal processes, and commission periodic effectiveness reviews (Lubis et al., 2024). These companies are often required to restructure their governance frameworks and internal processes without having access to sufficient resources Kontogeorga et al. (2022). Similarly, Rose (2016) argues that compliance with internal control and risk management provisions does not necessarily translate into improved organizational performance. Still, international and domestic evidence indicates that better board quality, diversity, and disclosure ultimately lower the cost of capital and curb earnings management (Ali et al., 2021; Borlea et al., 2017).

In sum, Law 4706/2020 represents a paradigmatic shift in Greek corporate governance: it links board suitability, diversity, and independent oversight to the integrity of financial reporting, embeds EU best practices into domestic law, and strengthens the competitive position of Greek listed companies. The next section outlines the methodology used to assess the administrative and financial consequences of this regulatory transition. The next section outlines the methodology used to assess the administrative and financial consequences of this regulatory transition.

2.6. Alternative Theoretical Explanations and Empirical Observations

Beyond the legal and institutional framework, improvements in corporate governance may also be influenced by structural dynamics and external pressures. One perspective attributes these improvements to market-driven forces, where the presence of foreign investors and deeper integration into international capital markets incentivize firms to adopt higher governance standards. In Greece’s post-crisis landscape, firms may have pursued transparency and accountability in response to investor expectations, irrespective of legal mandates (Ferreira & Matos, 2008; Boubaker et al., 2014). Within this view, Law 4706/2020 reinforced evolving practices rather than initiating them.

Another explanation relates to institutional convergence within the European Union. Key provisions of Law 4706/2020 align with the Shareholder Rights Directive and the Audit Regulation 2014, suggesting that reforms in Greece were shaped by broader European governance norms rather than purely domestic innovation (Enriques & Volpin, 2007; Hopt, 2011; Siems & Deakin, 2010). EU harmonization has often guided governance transitions across member states.

A third theoretical view emphasizes symbolic compliance, particularly in countries like Greece with concentrated ownership and dominant family-controlled firms. In such settings, governance reforms may be adopted for legitimacy rather than meaningful change (Porta et al., 1999; Westphal & Zajac, 1998). This pattern is often more prevalent where enforcement is limited (Aguilera et al., 2008). Prior research has shown that earlier reforms in Greece, such as Law 3016/2002, largely failed to produce substantive changes in governance practices, with some scholars characterizing the law as mimicking international standards without altering underlying power dynamics (Lazarides, 2010). Against this backdrop, it becomes essential to monitor whether Law 4706/2020 marks a departure from this pattern or risks similar outcomes.

Complementing these theories, a panel study of 113 Greek firms (S. I. Paganou et al., 2024) found a U-shaped relationship between ownership concentration and performance. While not statistically significant, sustainability reporting and managerial ownership were positively associated with performance. These findings align with Law 4706/2020’s aims. According to the Hellenic Capital Market Commission (2024), companies have begun adopting suitability policies and restructuring governance mechanisms, indicating progress in aligning with the law’s objectives.

It should be noted that, to date, there is limited empirical research assessing the full impact of Law 4706/2020, making it premature to draw definitive conclusions about its long-term effectiveness. This highlights the need for future studies employing firm-level data and robust econometric designs.

2.7. Objectives

This study aims to examine the evolution and impact of corporate governance legislation in Greece through a comprehensive legal and empirical analysis. It seeks to trace the progression of statutory frameworks, benchmark Greek corporate governance reforms against international standards, and evaluate the administrative and financial implications of compliance for firms listed on the Athens Stock Exchange. By combining legal analysis with a structured review of secondary sources, the study aspires to identify key regulatory shifts, highlight areas of convergence and divergence with EU directives and foreign codes, and assess the practical consequences of implementation.

3. Materials and Methods

This study employs a two-stage qualitative design combining a narrative literature review with a comparative legal analysis of Greece’s corporate-governance statutes. Stage one maps the evolution of regulatory provisions; stage two assesses their anticipated administrative and financial impacts on firms listed on the Athens Stock Exchange. This study employed a comprehensive range of sources, as shown in Figure 2. According to Pautasso (2019), a critical analysis of previous and pertinent literature is essential in academic papers to provide a comprehensive understanding of the topic.

Data derived from four categories of secondary sources—legal texts, regulatory documents, scholarly articles, and official industry reports—are summarized in Figure 2. Materials include Laws 3016/2002 and 4706/2020, Hellenic Capital-Market-Commission (HCMC) circulars and decisions, the Shareholder-Rights Directive II, peer-reviewed studies on board diversity and committee effectiveness, and compliance surveys such as PWC (2014) and (Hellenic Capital Market Commission, 2016). As illustrated in Figure 2, each group contributed a distinct perspective—academic, regulatory, practical, or governmental—on the legislative and operational aspects of corporate governance.

Analytical work advanced through four intertwined steps. First, statutory provisions were coded into seven governance dimensions: board composition, independence, diversity, committees, internal control, disclosure, and sanctions. Second, each dimension was benchmarked against EU directives and flagship foreign codes (Cadbury, SOX, German Code, Loi PACTE) to gauge convergence. Third, an administrative-impact matrix enumerated compliance tasks—such as instituting audit committees, drafting suitability policies, and issuing the annual Internal-Control and Risk-Management Statement that boards must certify alongside the financial statements under Articles 15–16 of Law 4706/2020. Fourth, a financial-impact appraisal triangulated cost items (independent-director remuneration, audit outsourcing, certification expenses) with market evidence on bid–ask spreads and earnings-management incentives.

The authors used Boolean operators to simplify and refine the search for unique documents in the dataset. The ‘AND’ operator restricted the specific search by overlapping terms, ensuring relevance; ‘OR’ expanded it, capturing a broader range of documents. To carefully filter and identify pertinent entries while avoiding duplicates, operators were applied in a structured search strategy.

For this strategy, we conducted a structured search of Scopus and Web of Science for the period 2000–2025 combining keywords and phrases such as “corporate governance,” “Greece,” and specific legal references like “Law 3016/2002” and “Law 4706/2020.” The ‘AND ALL’ approach ensured that all relevant phrases concerning board diversity, internal controls, compliance, and shareholder communication were included. Moreover, ‘LIMIT-TO (LANGUAGE, English)’ was used to narrow the search results to include only publications in the English language. The asterisk wildcard (*) was used to include all the grammatical forms of the specific terms mentioned in

Table 2. Key Terms, Keywords, and Boolean Expressions.

Search Parameter	Terms and Expressions
Main Keywords	“corporate governance”, “Greece”, “Law 3016/2002”, “Law 4706/2020”
Additional Keywords	“board diversity”, “internal controls”, “compliance”, “shareholder communication”
Boolean Operators	AND, OR, AND ALL
Search String	TITLE-ABS-KEY (“corporate governance*” OR “Greece” AND “Law 3016/2002” AND “Law 4706/2020”) AND ALL (“board diversity*” OR “internal controls*” OR “compliance*” OR “shareholder communication*”) AND LIMIT-TO (LANGUAGE, English)

Note: Search parameters and Boolean combinations used during the structured literature review to identify relevant documents on corporate governance reform in Greece. The asterisk (*) indicates the use of a wildcard to include all grammatical forms of the specific terms.

. Only studies directly addressing Greek listed companies or offering comparative analyses of the Greek regulatory framework were retained; all selected works were evaluated for relevance, credibility, and their contribution to understanding developments in Greek corporate governance.

This methodology facilitates sophisticated comprehension of the theoretical underpinnings, intended purposes, and pragmatic consequences of laws. This study aims to provide sources to review the evolution of corporate governance rules in Greece, identifying significant advancements, challenges, and areas for further investigation. The criteria for selecting sources were based on their relevance to the topic of corporate governance legislation in Greece and their contribution to understanding the evolution, implications, and practical challenges of laws. Finally, sources that provided a range of viewpoints, including regulatory, academic, and practical perspectives, were included in the final analysis. To ensure a comprehensive and targeted literature review, specific selection criteria were established, and a structured search strategy was implemented as detailed in Table 2. A qualitative, document-based approach was selected due to the normative and institutional nature of the research questions, as well as the limited availability of post-reform firm-level data, which constrains the use of quantitative methods at this stage (Levy, 2008).

Synthesis of these strands yields an expected benefits-versus-costs profile: greater transparency, enhanced investor confidence, and improved reporting quality versus higher administrative expenditure, particularly for small-cap issuers. These insights inform two guiding propositions:

H1. 

Law 4706/2020 introduces substantively stronger governance mechanisms than Law 3016/2002, thereby increasing transparency and investor protection.

H2. 

Compliance with Law 4706/2020 imposes materially greater administrative and financial burdens than its predecessor, with the heaviest relative impact on small- and mid-capitalization firms.

This integrated methodological framework, blending doctrinal scrutiny with evidence-based synthesis, underpins the subsequent analysis of Greece’s regulatory maturation and its implications for corporate practice and financial reporting.

4. Results

The transition from Law 3016/2002 to Law 4706/2020 marked a significant evolution in the Greek corporate governance framework. The comparative analysis reveals comprehensive structural reforms and shifts in governance practices that strengthen oversight and accountability for Athens Stock Exchange-listed companies. Notably, Law 4706/2020 replaces the earlier “soft law” approach with a stricter, rules-based regime, introducing new mechanisms and standards that were absent or only weakly implied in Law 3016/2002. This section synthesizes the key findings, focusing on changes in board composition, the institutionalization of board committees and policies, enhanced transparency measures, and the administrative implications of these reforms.

Greek corporate governance has evolved with the passage of Law N.3016/2002 to Law 4706/2020, reflecting a major change in the legal environment controlling business operations. Law 4706/2020 significantly broadens the scope of governance, introducing a more rigorous and for boards (Articles 3–9). To improve accountability and governance standards, this more recent law establishes the Suitability Policy (Article 3) further defining the requirements and functions of board members. The Suitability Policy for board members, as mandated by Law 4706/2020, has played a pivotal role in improving corporate governance as it establishes that boards should be comprised of qualified individuals who foster transparency and improve the company’s performance (Tsene, 2017; Topalidis, 2020).

Another important provision of the law mandates that a minimum of 25% of board members be women, which has significantly enhanced the board’s decision-making processes. Research shows that boards with gender diversity are more efficient in monitoring management behavior, aligning with agency theory, emphasizing that diverse boards are better positioned to ensure oversight and improve organizational performance (Ntim & Soobaroyen, 2013). Moreover, gender diversity on boards offers significant benefits as Gharios et al. (2024) and Tran et al. (2024) state, including enhanced decision-making, oversight, and alignment with ESG goals as also reflected in

Table 3. Positive and Negative Studies on Gender Diversity in Boards.

Positive Studies	Negative Studies
Improves decision-making: Enhances strategic decisions, especially in Environmental Social Governance practices (Gharios et al., 2024; Tran et al., 2024).	Increased conflicts: Gender differences can lead to board conflicts (Andreoni & Vesterlund, 2001).
Enhances firm performance: Gender-diverse boards effectively monitor management (Ntim & Soobaroyen, 2013).	Communication challenges: May cause communication issues and higher conflict costs (Cox et al., 1991).
Boosts Environmental Social Governance strategies: Supports Environmental Social Governance goals through diverse perspectives (Pfeffer & Salancik, 2003; Giannarakis et al., 2014).	Economic underperformance: Diversity may reduce performance in patriarchal cultures (Wellalage & Locke, 2013).
Increases independence: Promotes better decision-making and board independence (Pfeffer & Salancik, 2003).	Undervaluation in family businesses: Women’s contributions are undervalued (Cole, 1997).
Encourages problem-solving: Diversity fosters innovative solutions (Shukeri et al., 2012; Ujunwa, 2012).	Structural barriers: Occupational segregation limits women’s roles (Aldrich, 1989).
Improves oversight and communication: Women enhance board discussions and investor relations (Elmagrhi et al., 2018).	Cultural resistance: Diversity policies may disrupt traditional dynamics (Wellalage & Locke, 2013).
Educational diversity boosts performance: Education improves focus on sustainability (Carrasco Hernández & Sánchez Marín, 2014).

Note: Table 3 contrasts scholarly findings regarding the effects of board gender diversity, presenting both performance benefits and potential drawbacks as identified in the literature.

. Another benefit that derives from this aspect is enhanced investor communication (Elmagrhi et al., 2018; Joy et al., 2008) and efficient management monitoring, that promotes greater corporate social performance (Nerantzidis et al., 2022).

Despite these benefits, significant challenges arise in the adoption of such diversity mandates, such as cultural resistance and communication barriers that persist, particularly in patriarchal market contexts (Andreoni & Vesterlund, 2001), which may reduce performance (Wellalage & Locke, 2013). Structural barriers and undervaluation of women in family businesses further limit their contributions (Cole, 1997; Aldrich, 1989). These findings emphasize the need for context-sensitive policies to harness the advantages of diversity while addressing its drawbacks.

Furthermore, Law N.4706/2020 institutionalizes governance structures by making the establishment of Audit, Remuneration, and Nomination Committees mandatory (Articles 10–12) and establishes a proportional governance system (Article 13) based on company size and complexity. These committees are composed of non-executive members, and at least two of them must be independent. They are not organs of the company but assist the work of the board. More specifically, the Remuneration Committee is responsible for submitting proposals for remuneration policy and reviewing the final draft remuneration report, that promotes transparency of financial reporting. Companies disclose actions related to pay changes, as this helps investors and shareholders be informed about the firm’s seriousness in aligning its performance with its compensation strategies. In the case of a financial crisis, a company facing uncertainty about its future cash flows, if it voluntarily discloses any issues related to expected financial risk, is observed to improve investor confidence (Jorgensen & Kirschenheiter, 2003).

Articles 18 to 20 focus on the importance of transparency and the provision of information to investors, which are vital for the enhancement and development of the Capital Market. In particular, Article 18 requires a distinct disclosure procedure for the elections of board members, whereas Article introduces a framework for corporate announcements. These measures reflect the legislative commitment to fostering clear communication between corporations and investors, which is fundamental to the vitality of the market. The Board of Directors should ensure the existence of a continuous and constructive dialogue with the company’s shareholders, especially those with significant holdings and a long-term perspective. To facilitate shareholders’ information and participation, companies should leverage modern technology, maintaining a comprehensive, up-to-date website for timely, easy, and inexpensive communication. According to Law 4706/2020, companies must establish a dedicated unit to serve shareholders by providing direct, accurate, and equal information, supporting them in exercising rights derived from the company’s articles or legislation. Moreover, companies should have Corporate Unit Announcements that can work autonomously, or as a single unit with the shareholder services to disseminate information on regulated disclosures and corporate events, ensuring compliance with disclosure obligations. Finally, the existence of the company’s operating regulations, with content compliant with the law and up-to-date, should also be certified by the auditing company or the statutory auditor in Report Control (Law Alert, 2020).

Stricter guidelines also greatly strengthen the foundation of internal control units (Articles 15–16) and promote a mandatory Corporate Governance Code with a ‘comply or explain’ approach. Regulatory Compliance differs from Legal Service, which provides legal advice, and documentation, and from Risk Management, which covers broader risk types without specifically advising on legal compliance. Regulatory Compliance uses methods and tools to assess the risk of non-compliance with the implementation of the regulatory framework and the provision of information to the administration. These changes aim to align Greek corporate governance with modern compliance standards, enhancing accountability, transparency, and stakeholder trust.

The legislative provision reinstates the implementation of Corporate Governance (CG) Codes, which introduce best practices beyond the legal framework, allowing companies flexibility in adaptation. The “Special Practices” outlined in the Code may pose difficulties for smaller enterprises to implement comprehensively, necessitating that they provide justifications for any non-compliance, suggest alternative approaches, and detail risk mitigation strategies. These justifications must be articulated clearly and convincingly to enable investors to evaluate the company’s commitment to corporate governance principles. Furthermore, the revision of the penalty framework (Decision 1A/890/18-09-2020, Article 24 of Law 4706/2020) enhances accountability, protects market integrity, and encourages adherence to regulations. This framework was issued by the Hellenic Capital Market Commission (Hellenic Capital Market Commission, 1999), which is entrusted with supervising compliance and imposing penalties under Law 4706/2020.

After concluding an in-depth analysis of Greece’s corporate governance legal framework, the following table (

Table 4. Comparison Between Law 3016/2002 and Law 4706/2020.

	Law 3016/2002	Law 4706/2020
Field of application	It is foreseen	The field of application is enriched
Provisions of the Board of Directors	They are provided for in (Articles 2–4)	The operational framework is strengthened and tightened (Articles 3–9)
Eligibility Policy for Board members	Not provided	Provided (Article 3)
Diversity	Not provided	Provided (Article 4, paragraph 1)
Distinguishing members of the Board of Directors	It is foreseen	It is foreseen (The relevant framework is strengthened and the acceptance and competence criteria are specified as the case may be)
Control Committee	Not provided	Provided (Article 10)
Remuneration Committee	There is no provision for the establishment of a Commission. Article 3 paragraph 2 provides for a provision on matters of remuneration of managers and auditors that fall under the competence of the Board of Directors. The remuneration of non-executive members is stipulated to be determined on the basis of the law on joint-stock companies (Law 4848/2018)	Provided (Article 11)
Nominations Committee	Not provided	Provided (Article 12)
Corporate Governance System	Not provided	Proportionate formation of the framework of organizational Executive Directors arrangements of each company is foreseen, according to the size, nature, scope, and complexity of its activities (Article 13)
Regulation	It is foreseen	The relevant framework is strengthened (Article 14)
Internal control unit	Provided (articles 7–8)	The framework is strengthened with strict requirements (articles 15–16)
Implementation of Corporate Governance code	Not provided	The obligation to follow the company’s code of conduct aligns with Article 152 of Law 4548/2018 on Corporate Governance declarations and the “comply or explain” principle.

Note: This table provides a side-by-side comparison of the main provisions of Law 3016/2002 and Law 4706/2020, highlighting the structural improvements introduced in the newer framework.

) summarizes the key distinctions and improvements between Law 3016/2002 and Law 4706/2020.

As shown in Section 2.2, early compliance lagged on remuneration (2%) and internal-control (17%) disclosures. Greece’s corporate governance model aligns more with Continental Europe due to high insider ownership and regulatory intervention but lacks Germany and France’s strong enforcement mechanisms. While recent reforms push Greece toward greater stakeholder inclusion, it remains primarily shareholder-focused. Its transition from insider-dominated governance is similar to Japan, yet it falls behind South Africa in sustainability efforts and Australia in regulatory enforcement.

5. Discussion

Law 4706/2020 represents a pivotal shift in Greek corporate governance, aligning it with international standards to enhance transparency, accountability, and investor protection. Research suggests that robust governance structures, such as those required under Law 4706/2020, may attract both domestic and foreign investment, providing financial benefits like better capital access and reduced financing costs (Porta et al., 1998, 2008; Bravo-Urquiza & Moreno-Ureba, 2020).

The Suitability Policy for board members, as mandated by Law 4706/2020 has been found to positively affect both administrative and economic outcomes, particularly in areas like strategic decision-making, environmental and social practices, and sustainable development goals (Gharios et al., 2024; Tran et al., 2024; Ma et al., 2024; Ulfa & Rahman, 2024), contributing to higher investor confidence and potentially reducing capital costs (Aluchna & Kuszewski, 2020; Tsene, 2017). Moreover, studies have shown that gender diversity contributes to the long-term value enhancement and shareholder perception (Gharios et al., 2024), underlining the importance of inclusive decision-making. The resource dependence theory further suggests that gender-diverse boards bring independence, which is vital for informed decision-making and improves financial performance (Pfeffer & Salancik, 2003; Giannarakis et al., 2014). This relationship shows how the law and suitability policies align with governance theories to enhance organizational performance.

However, the economic benefits are not always unambiguous. While gender diversity can increase efficiency, it may also lead to potential conflicts within the board. Research indicates that women may be perceived as less altruistic than their male counterparts (Andreoni & Vesterlund, 2001), and such perceptions can increase conflicts and communication issues, which could have negative consequences for the organization’s performance (Cox et al., 1991; Hambrick et al., 1996). Therefore, while diversity brings significant advantages, there is a need for careful management of internal conflicts to fully capitalize on its benefits.

Moreover, studies conducted in emerging markets reveal a reduction in economic performance and increased agency conflicts when gender diversity is introduced in environments with patriarchal corporate cultures and homogeneous boards. This reinforces the idea that gender diversity policies need to be context-sensitive to ensure they produce positive economic and administrative outcomes. For instance, in markets where gender diversity is not traditionally embraced, its introduction might disrupt the existing balance, leading to increased conflict and inefficiencies (Wellalage & Locke, 2013). Therefore, the implementation of the Suitability Policy under Law 4706/2020 must be tailored to each market’s unique cultural and structural context to avoid potential setbacks in performance.

In the case of family businesses, research indicates that the contributions of female board members are often undervalued compared to their male counterparts, with family dynamics playing a critical role in this imbalance (Cole, 1997; Hollander & Bukowitz, 1990). Despite these challenges, the presence of female directors can be a critical step toward improving governance. Furthermore, education emerges as a significant factor in enhancing board effectiveness. Studies suggest that managers of family SMEs with university education exhibit greater motivation, are more focused on sustainable development, and prioritize corporate social responsibility, which positively impacts the company’s long-term viability and governance (Carrasco Hernández & Sánchez Marín, 2014; Xanthopoulou & Sahinidis, 2022).

Effective corporate governance requires robust processes and the quality and independence of board members (Kanapathippillai et al., 2016). Law 4706/2020 emphasizes the role of remuneration and nomination committees in maintaining board independence (Vinjamury, 2020), mitigating agency conflicts, and ensuring alignment with international governance standards. The Nominations Committee recommends suitable persons to the Board of Directors based on a specific procedure, aligned with the company’s suitability policy. If a person who chairs the Board is also on the remuneration committee, any proposals that would be made by the nomination committee may be adopted and implemented by the board of directors due to the influence of this person (Board Chairmen’s Involvement in the Nomination and Remuneration Committees and Earnings Management). This is in contrast to the agency theory, which suggests that corporate boards should consist of experts and a majority of independent outside directors (Hamdan et al., 2019). The independence of remuneration and nomination committees, as emphasized in the new law, ensures that the board remains impartial and focused on the long-term success of the company. This aligns with global best practices, such as those found in the UK Corporate Governance Code and the German Corporate Governance Code, where independent governance committees play a central role in ensuring accountability. Establishing a clear separation of roles between executive and non-executive directors is essential to maintain board integrity.

However, the law also presents challenges. Compliance demands, including forming committees and extending audit functions, entail added costs that may strain smaller firms and deter some from going public (Rose, 2016; Kontogeorga et al., 2022). Additionally, while compliance strengthens governance, excessive regulatory requirements can limit managerial flexibility, potentially hindering innovation and responsiveness to market changes (Putra & Setiawan, 2024). Balancing these compliance needs with operational agility is essential for realizing the law’s long-term financial benefits while minimizing its challenges.

Furthermore, the literature highlights that regulatory compliance, enhances effectiveness and prudent management (Di Battista et al., 2022), aims to reduce legal risks, in the prevention of fraud (Lubis et al., 2024), and mitigates corruption and fraudulent practices, including earnings manipulation (S. Paganou et al., 2024b). However, research has shown that compliance with recommendations regarding board composition and remuneration policy is positively linked to the firm’s performance, while compliance with recommendations on risk management and internal controls has no impact on performance (Rose, 2016). The legal provision reintroduces the practice of applying Corporate Governance (CG) codes, offering best practices and self-regulatory guidelines beyond the mandatory legislative framework. Companies can select or adapt CG codes according to their unique characteristics. Particularly, the “Special Practices,” which form a core part of the Code, may be challenging for small companies to fully implement. In such cases, these companies are required to justify their non-compliance, propose alternatives, and outline risk mitigation measures. This explanation must be clear, substantial, and convincing to allow investors and stakeholders to evaluate the company’s governance approach, even when deviations occur. This framework promotes accountability, protects market integrity, and aligns CG codes with company-specific needs (Papadimitriou, 2021). Nevertheless, concrete enforcement examples remain scarce. While the HCMC has formalized its penalty framework (Decision 1A/890/18-09-2020), most activity to date involves audit reviews and guidance rather than public sanctions. This reflects the early stage of enforcement and highlights the importance of monitoring practical implementation. Importantly, these regulatory burdens and governance adjustments are not uniform across firms. Small-cap and family-controlled businesses often face disproportionately high compliance costs and internal restructuring challenges compared to large-cap or internationally oriented firms, which tend to have more established governance infrastructure. These heterogeneous effects warrant further empirical scrutiny to guide proportionate policy responses.

6. Conclusions

The main purpose of the present study was to provide a comprehensive analysis of the evolution of corporate governance legislation in Greece, focusing on the transition from the old Law 3016/2002 to the new Law 4706/2020 and its implications for listed companies, building on prior analysis of this transition (S. Paganou et al., 2024a). Through an examination of the administrative and financial impacts of these reforms, the study has highlighted the shift from a flexible governance model to a more structured regulatory framework. Our analysis points to the likelihood that Law 4706/2020 will enhance corporate governance, through provisions such as the establishment of board suitability policies, gender diversity requirements, internal control mechanisms, and independent committees for remuneration and nominations, yet actual market-level effects remain to be verified empirically. Additionally, the establishment of a Corporate Governance Code and stricter penalties for non-compliance represent a shift toward a more regulated and transparent governance environment. These measures aim to improve corporate accountability, investor confidence, and organizational efficiency.

While these provisions are expected to foster more effective oversight and improve financial reporting quality, our document-based approach cannot fully assess their real-world effects. Empirical validation remains limited, particularly due to the lack of comprehensive post-reform firm-level data. The study also underscores implementation challenges, especially for small-cap firms facing increased compliance burdens and capacity constraints.

Given these limitations, future research should adopt quantitative methods—such as panel data analysis or event studies—to test the law’s actual impact on firm behavior, transparency, and performance. Such evidence would help distinguish between improvements driven by regulatory change and those arising from broader market or institutional trends.

Moreover, examining how companies adapt to governance reforms in practice—particularly with respect to diversity, internal control, and compliance mechanisms—will offer valuable insights for both scholars and policymakers. These inquiries could inform ongoing efforts to balance regulatory effectiveness with proportionality and feasibility across firm sizes.

Overall, the findings address the study’s dual objectives: first, to assess whether Law 4706/2020 strengthens governance mechanisms relative to Law 3016/2002, and second, to evaluate whether it introduces disproportionate compliance burdens for small and mid-sized issuers. The evidence supports both propositions at a conceptual and institutional level, while highlighting the need for empirical testing to verify their long-term implications in practice.

In sum, Law 4706/2020 marks a turning point in Greece’s corporate governance landscape, embedding EU best practices into national law while aiming to modernize oversight and disclosure standards. Its ultimate success, however, will depend on effective enforcement, market acceptance, and sustained empirical evaluation.