Institutional Problems of Сorporate Governance in State-Owned Enterprises

Abstract

The article substantiates the need to improve the mechanism of corporate governance in stateowned enterprises as a competitive sector of the economy, which affects the investment climate and competitiveness of the national economy. Mostly, senior management is not interested in the development of the company because their salaries are low and they are often support rich people, who are only follow own goals such as raising of own profits. The financial performance of state-owned businesses has been analyzed, and many companies have been identified that have the production potential to thrive in the national market but are operating at a loss. All state-owned enterprises have common problems, which connect with employees, who don’t care about inner problems of the company and how they can solve them because of the lack of formed responsibilities and duties in the law. The community believes that institutions are controlling all activity of state-owned enterprises, but the gap in the law has a bad influence on results of the company. As a result, it was found that the tendency to close state-owned enterprises is caused by institutional problems arising from insufficient funding, uncompetitive salaries of senior management, a bad implementation of essential tasks from directors, corruption and lobbying of political parties or individuals in the system of corporate relations. In addition, the COVID-19 pandemic became one of the main reasons of liquidation of state-owned and private enterprises, which weren't ready for this new conditions. Governments of different countries tried to prevent a big financial crisis, but their actions and financial opportunities weren't enough to help enterprises to survive in harsh conditions. As a result, the financial situation of state-owned enterprises isn't acceptable and many of them don't even have money in order to pay salaries to their employees. Meanwhile, they have the production potential to prosper and to compete with other enterprises on the national and international markets. By the way, the legislative transformations of 2021, which aim to improve corporate governance at state-owned enterprises and to introduce foreign experience into the mechanism of corporate relations development, are studied. The directions of improvement of the mechanism of corporate management at the state enterprises are offered.