Implementation of corporate governance standards for company growth and development

Abstract

Corporate Governance Standards (standards of corporation management) provide good grounds for effective implementation of key management principles, exercise of shareholders' rights and their equity stakes, equal treatment of shareholders, appropriate role of all other stakeholders in the manner of governance of a corporation, disclosure and transparency of information on company operation and appropriate role and responsibility of the boards established within the company. These standards are established on the basis of the Principles of Corporate Governance adopted by the Organization for Economic Cooperation and Development (OECD), and they are generally intended for use by developed corporations with a significant dispersion of ownership. Nevertheless, implementation of corporate governance standards was introduced also in the territory of Bosnia and Herzegovina, although in recent years, its capital markets (Sarajevo and Banja Luka) have been mainly trading in (short-term and long-term) debt securities issued by the Entity governments and, to a much lesser extent, in equity securities of incorporated state-owned enterprises. The aim of this paper is to show that implementation of corporate governance standards provides greater transparency in the operation of domestic listed companies, as well as a higher level of alignment of the domestic regulatory framework with the principles applied in the developed economies. This makes the domestic economic space more attractive for foreign investors, which implies that corporate governance standards directly support the growth and development of domestic companies and the economy as a whole. Basic scientific methods used to research the described issues include analysis methods (primarily the level of implementation of corporate governance standards in the country and its neighborhood), synthesis (in order to form conclusions about the effects of the attained corporate governance level) and comparison of solutions present in the practice of corporate governance in Bosnia and Herzegovina with the modalities present in its neighboring countries.