Corporate Governance in Emerging Markets. Evidence From the Romanian Companies Listed at Bucharest Stock Exchange

Emerging markets play an increasingly important role in the global economy, given their high economic growth prospects and their improving physical and legal infrastructures (Dallas, 2011). Corporate governance affects firm performance and countries growth and development through several channels such as: increased access to external financing by firms, lower cost of capital, better operational performance and better relationships with all stakeholders (Ararat et al., 2014). In Romania, corporate governance is mostly used as a fashionable term, despite the fact that this strategic instrument used for increasing organisational performance, became a part of the economic life at the beginning of 2000 (Feleaga, 2008, p. 9). Our study focuses on identifying the key corporate governance mechanisms implemented by the Romanian companies listed at Bucharest Stock Exchange as means for gaining the credibility of individual and institutional investors, in terms of: disclosure and business ethics, risk management, board composition and corporate performance management. In this regard, we will use a quantitative approach, based upon the Annual Reports from the most traded companies listed at Bucharest Stock Exhange indexed BET-XT, including financial investment companies. The content analysis is divided into two basic sections covering both financial performance aspects and the corporate governance aspects. Content analysis is basically used to assess the level of compliance with corporate governance code of conduct in prior studies. Our grid of analysis comprises 44 items and is based upon the financial, corporate governance and disclosure indicators elaborated by Uwuigbe (2011). The results of our analysis indicate that efficient corporate governance mechanisms don't have a positive impact on the financial performance and stock market valuation of the companies listed at Bucharest Stock Exchange, including those where the state represents an important shareholder (Nuclearelectrica, Transgaz, Transelectrica, Romgaz, SIF Oltenia, SIF Banat Crisana, SIF Muntenia). At this point, the most profitable companies in Romania are the ones that operate in the banking/financial services sector (Transilvania Bank, SIF Oltenia, SIF Banat Crisana) and oil, gas, petroleum and energy sector (Romgaz, Electrica, Transgaz, Transelectrica).