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Корпоративно управление на финансови групи (спазвай и обяснявай)

Nedelchev, Miroslav (2010): Корпоративно управление на финансови групи (спазвай и обяснявай). Published in: (2010)

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Abstract

The major function of corporate governance is to increase shareholder’s wealth. Observing the principle “comply or explain” by the financial companies has led to imbalance between shareholder’s wealth and the interests of society. Good practices in corporate governance of financial groups should be implemented to entirely new principle: “comply and explain.”

The role of each country in the financial groups determines its practices in corporate governance. Bulgaria has subordinated role due to the presentation of foreign groups of subsidiaries and branches. Following the EU membership the direction of impact is bilateral and an interaction between the controlling entity and controlled entity occurred. With the development of the market economy the concentration of ownership has increased, like the family ownership, and the transparency has reduced. The separation between the control and the ownership changed the principle “principal-agent” and the related agency problem. The main conflict is between the majority shareholders from the Euro zone and the minor shareholders outside the Euro zone.

The financial group structure is recommendable for the new EU members, since in long-term aspect it shall provide an opportunity to create significant advantages in terms of competitive power and adaptation to the constantly changing economic conditions. For this purpose, in short-term aspect supervision is required to prevent structures difficult to restructure and to protect the interests of shareholders and investors by requiring disclosure of information about the structure and shareholder rights.

After the 2007 crises a parallel process have been observed: return to the main core of the activity. The controlling entities from Western Europe withdraw their funds from the controlled entities in Eastern Europe. In other cases, cross-sector groups established during the last decade under government programmes are restructured by outsourcing the new activities and focusing on the traditional sector of financial activity. Among the arguments in favor of such approach is the fact that this will allow better understanding of market and close relationship with regulatory authorities. Last but not least, is the possibility of financial groups to benefit more from the government rescue programmes. The adoption of good practices in corporate governance will make the economies of Eastern Europe less vulnerable from Western Europe parent companies.

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