Corporate governance practices and firm performance measured by Croatian Corporate Governance Index (CCGI ® )

In this paper, we examine the patterns of behaviour of companies from former socialist countries related to the application of good corporate governance practices. We try to assess the level of transparency and to determine if there are any factors that systematically influence corporate behaviour in this regard. Using a sample of 145 companies from Croatia, Macedonia, Slovenia and Serbia, we apply Standard & Poor's (S&P) methodology for assessment of transparency and disclosure levels and find that the companies in these countries generally lag in terms of transparency behind their peers worldwide as measured one decade ago. Additionally, using the same sample, we apply a regression analysis and conclude that the level of transparency is positively related to the size of the company and the need for external financing, but negatively to the concentration of ownership and we also observe important country effects. We do not find a statistically significant relationship between transparency and profitability and relate this finding with the prevailing attitude of the companies towards the stock market. Having in mind the different scores by country and by area of disclosure, we believe that there is still scope for improvement using proper advising and public policy measures.

Section: Introductionmentioning

confidence: 92%

Determinants of transparency and disclosure – evidence from post-transition economies

Arsov

Bucevska

2017

“…are trying to achieve the smooth functioning of the governing bodies of firms (Korent et al, 2014). However, following Lehn et al (2009) we expect that the board structure established by the company, regardless of these recommendations, will be consistent with the objective of maximising the value of the company.…”

Section: Introductionmentioning

confidence: 99%

“…These aspects have also been looked at by researchers who have studied whether the determining factors in the composition of boards are related to the basic functions assigned and whether this composition has an impact on the management of the business (see Borlea, Achim, & Mare, 2017;Cavaco et al 2017;Farag & Mallin, 2017;Korent, Dundek, & Calopa 2014;Marinova, KEYWORDS corporate governance; board of directors; size; diversity; independence; cEo power; tobin's Q; Roa Plantenga, & Remery, 2016;Terjesen, Barbosa, & Morais, 2016, among others). However, as will be discussed later, the results obtained in the literature are neither conclusive nor definitive and, accordingly, the contribution of new evidence will improve the state of knowledge concerning the questions raised in this work, that is, whether the composition of the board of directors gives priority to the functions of supervision and/or advice and, moreover, determining if that composition affects the performance of the firm.…”

Section: Introductionmentioning

confidence: 99%

“…Given this situation, in our country, as in other developed countries, the need to legislate or make recommendations regarding the composition, functions and responsibilities of the highest corporate governance body has become apparent, providing this issue with a renewed impulse (Díaz, García, & Baraibar, 2017;Korent et al, 2014;Murayev, Talavera, & Wei, 2016).…”

Section: Introductionmentioning

confidence: 99%

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Boards of directors: composition and effects on the performance of the firm

Martín

Herrero

2018

This paper analyses the structure of boards of directors and its impact on business performance, which is approximated by economic profitability and the Tobin's Q ratio. We focus on three basic aspects of boards that have been reviewed in the recent reform of the Good Governance Code: the size of boards, their independence and their diversity. For the study of diversity, we use an index that integrates not only the gender of board members, but also their age and nationality, since these are factors that can influence the knowledge, experience and skills of the directors. The results confirm a high degree of compliance with the recommendations of the Good Governance Code, and suggest that the performance of the advisory and monitoring functions are factors that determine the composition of boards. With respect to the performance of the company, we note that there is a negative and significant relationship with the independence of boards. However, the results are sensitive to the performance measure employed.

“…National institutions, the mode of economic transformation, the general business environment and outside influences often influence corporate practice -including the use of mission statements -more than do the leaders, policies and cultures of individual firms (Hetrick, 2002;Korent, Đunđek, & Čalopa, 2014;Mesner-Andolšek & Štebe, 2005). During the economic transition of the 1990s, changes in management structures in the CEE were often modest or absent (Bojnec, 1999).…”

Section: Slovenia: the Institutional Contextmentioning

confidence: 99%

Corporate purpose in a small post-transitional economy: the case of Slovenia

Stubelj

Dolenc

Biloslavo

et al. 2017

Firms are driving forces of economic and social development; therefore it is important to understand what is their primary goal or purpose. The aim of the paper is twofold. First, the paper presents baseline theoretical concepts on the firms' purposes. Secondly, the paper presents the results of the empirical study in Slovenia with which we tried to determine how firms' purposes are perceived by their managers and how they see their responsibility to owners and other stakeholders. The empirical study was based on a survey that was sent to the management of 1400 Slovenian mediumsized and big companies, of which about one third responded. The survey questionnaire was pre-tested through interviewing five top managers in five Slovenian firms with different ownership structure. On the basis of the empirical study it is possible to conclude that, on average, Slovenian firms put the interests of all stakeholders before the interests of only shareholders. So it seems that the majority of managers follow the stakeholder approach in the governance model.