Developments in Corporate Governance in Central and Eastern Europe

Posted: 18 Oct 2000

See all articles by Chris Mallin

Chris Mallin

Norwich Business School, University of East Anglia; University of Birmingham - Birmingham Business School

Ranko Jelic

University of Sussex Business School

Abstract

The countries of western Europe have seen far reaching corporate governance developments in recent years, ranging from the Cadbury Report in the UK to the Vienot Report in France. These developments have been discussed in toto in the report of the CEPS working party on corporate governance in Europe. However alongside the developments in western Europe, there are fundamental political and economic changes going on in the countries in Eastern and Central Europe (CEEC) which have significant implications for the development of corporate governance in these countries.

In this paper we analyse the changes that have taken place in a number of CEEC countries, highlighting both the commonalities and the differences, and the way that these countries are developing in terms of their corporate governance structures. The demise of central planning, for example, has led to a shift of control, and we seek to examine such issues as where control now lies, the effects of privatisation, and the problems of development of institutional arrangements for corporate governance.

Financial institutions have a key role to play in the changes in the CEEC and therefore the latter part of the paper places a special emphasis on the role of financial institutions, particularly banks, as monitors in the CEEC, and analyses the banks' role in firms' restructuring. The implications for the role of banks in any developing corporate governance system are immense, with banks playing a central role as monitors of corporate success. However the privatisation of banks and firms is not, per se, sufficient to ensure that these enterprises develop adequate corporate governance structures which are able to cope with problems endemic in the current framework, and are capable of evolving to take account of future changes.

We examine the existing structures in several CEEC, and provide a taxonomy of changes that have occurred to date. We discuss likely future changes and conclude on the likely effects on corporate governance in the CEEC.

JEL Classification: G34, P21

Suggested Citation

Mallin, Christine and Jelic, Ranko, Developments in Corporate Governance in Central and Eastern Europe. Available at SSRN: https://ssrn.com/abstract=236065

Christine Mallin (Contact Author)

Norwich Business School, University of East Anglia ( email )

Norwich Research Park
Norwich, NR4 7TJ
United Kingdom

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

Ranko Jelic

University of Sussex Business School ( email )

Falmer, Brighton BN1 9SL
United Kingdom
+441273872597 (Phone)

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