The impact of EU accession on corporate governance reform in Bulgaria

Abstract

Since the start of its post-socialist transformation in 1989, Bulgaria has imported a large number of formal institutions from advanced market economies, including the EU-15. However, the adoption of EU and other international rules has not been effective due to weak enforcement and application by domestic actors such as the securities regulator, courts, and company owners/managers. The failures of corporate governance in Bulgaria until the early 2000s can be attributed to the broad institutional context (the lack of rule of law) as well as the creation of quasi-public companies as a result of the first wave of mass privatisation (1996–97). Since 2002, information disclosure and protection of shareholder rights have improved significantly. The article examines the proposition that this is partly due to the prospect of EU accession, which has certainly influenced the attitudes and expectations of domestic actors. Based on company surveys and in-depth interviews, the paper analyses how the securities regulator and company owners/managers have been adapting to the imported formal rules.