Behavioural Economics and King V: Understanding the Human Side of Corporate Governance

This paper examines South Africa’s new King V governance framework through the lens of behavioural economics. The central argument is that many corporate governance failures do not arise because boards lack formal rules; they arise because real people misperceive incentives, defer to authority, overestimate their own judgement, silence dissent, rationalise doubtful conduct and prioritise short-term gain over long-term value. Behavioural economics therefore helps to explain why formally compliant organisations can still fail ethically, strategically and institutionally. King V, released on 31 October 2025 and effective for financial years beginning on or after 1 January 2026, responds to a changed governance environment in South Africa. It simplifies the code, standardises disclosure and sharpens guidance on ethics, sustainability, independence, committee composition, remuneration, and the governance of data, information, technology and artificial intelligence. Read behaviourally, King V recognises that governance quality depends on how people actually decide, challenge, escalate concerns and justify outcomes in practice (IoDSA, 2025). The South African evidence is compelling. Transparency International reports a 2025 Corruption Perceptions Index score of 41/100 for South Africa, with 64% of respondents believing corruption increased in the previous 12 months and 18% of public service users reporting bribe payment. Auditor-General South Africa reports continued fruitless and wasteful expenditure, unauthorised expenditure, deficits and governance failures across public institutions. Corporate scandals such as Steinhoff and Tongaat Hulett, together with the state capture findings concerning Eskom and Transnet, demonstrate the practical consequences of authority bias, incentive distortion, cultural silence and weak challenge mechanisms. The paper concludes that South African organisations should implement King V as a behavioural operating system rather than a disclosure checklist. That means redesigning board information flows, strengthening committee independence, aligning remuneration with long-term value, institutionalising devil’s-advocate challenge, governing AI with human accountability, and building speak-up cultures that reward evidence-based dissent. These changes are especially important in forensic governance, risk management and institutional performance because they target the human conditions that allow control failures to persist.