Corporate Governance in Emerging Economies: Evidence From Romania

Corporate governance is a set of "rules of the game" through which companies are managed internally and supervised by Boards of directors, in the best interest of shareholders. Corporate governance is also acknowledged as a key element in attracting investments and in improving economic performance and competitiveness in the long term. For this reason, standard setters in developed countries have made substantial efforts to improve corporate governance. These efforts have been implemented in more or less formal ways, with respect to drawing governance quality standards to be adopted by companies in different institutional and industrial contexts. Such "best practice recommendations", issued by regulators and professional bodies in developed countries, have also been globally disseminated. Among the beneficiaries, emerging countries in the Eastern part of the European continent have adopted these standards to better manage the radical economic transformations that have taken place in the last two decades of the 20th century. Some of these transformations have envisaged reforming organisational structures, developing new product solutions and reformulating behaviour patterns in managing. It is estimated that the globalization of financial markets has helped to reduce the gap between advanced and emerging economies, in terms of governance implementation. However, economic delays attributable to emerging countries may also be factors acting against further improvement of corporate governance. In this context, our research aims to examine corporate governance principles used by companies from emerging economies, where competitiveness in the global economy today is more difficult. Emphasis will be set on the case of Romania. From a conceptual and regulatory point of view, in Romania corporate governance has emerged beginning with the early 2000s. The delay is explainable by the difficult steps taken on the line of political, legal, economic and social reform. In recent years, however, the corporate governance environment in Romania has changed. Transparency and accountability have become key factors not only for shareholders, but also for investors, buyers, suppliers, and other stakeholders. In this context, it is worth to consider, based on statistical data, the degree of development of corporate governance in Romania. The selected indicators are linked to attributes of the Board of directors, in particular Board structure, size, independence, frequency of meetings, and other factors. The sources used are based on the official data published by companies listed on the Bucharest Stock Exchange (BSE). The results will be compared with results of other case studies of emerging countries and the European best practice.