Corporate governance regulators should move beyond exposing corporate failures and sanctioning poor practices to recognising companies that set high standards, according to Alexandru Petrescu, president of Romania’s Financial Supervisory Authority (ASF).

Speaking after attending the OECD Corporate Governance Committee meeting in Paris on November 9-10, Petrescu said he had been particularly impressed by the approach adopted in several Asian jurisdictions, which places greater emphasis on promoting good corporate governance practices, rather than focusing primarily on shortcomings.

“Corporate governance should not be defined solely by identifying failures, exposing shortcomings and sanctioning poor practices. It should also be about recognising excellence, showcasing good examples and encouraging those who set higher standards,” Petrescu said in a statement.

He described the distinction as a shift from the traditional European emphasis on “name and shame” towards a “name and shine” approach, which seeks to highlight and reward good corporate governance practices.

While accountability and sanctions remain essential to deterring misconduct, regulators should also use positive examples to encourage companies to improve their governance standards, he said.

“Accountability is essential. But so is inspiration. While naming and shaming can deter misconduct, naming and shining can encourage ambition, build trust and foster a stronger culture of responsibility,” Petrescu said.

Regulators should not only make poor governance visible but also make good governance practices worth emulating, he added.

Such an approach could help shift corporate governance from a culture focused primarily on regulatory compliance towards one based on a broader commitment to transparency, accountability and responsible business practices.

“Perhaps this is how we move from a culture of compliance towards a genuine culture of good governance,” Petrescu said.