THE INTERACTION OF CORPORATE GOVERNANCE AND CAPITAL MARKETS

Sound corporate governance is one of the essential preconditions that ensures the reliability and efficiency of the financial markets. Most of the researches analyze the influence of corporate governance on the companies' performance and are concentrated on micro level. This research is focused on macro level and aims to investigate the European Union directives' influence on securities markets. In this paper we present a novel methodological approach-based on stock-price indexes' reaction analysis-for assessing the influence of the introduction of new regulation of the corporate governance issues to the securities markets. The aim of the research is to analyze how the introduction of the European Union directives regulating corporate governance issues influences securities markets. The research shows the contradictory results, but basically, all market indexes reacted both into the adoption and implementation of European Union directives, only the speed and scale of these indexes dynamics differed in a given period of time.