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ABSTRACT: Corporate governance includes structures that combine relationships between parties who invest resources and persons that monitor and manage businesses. These relationships are both formal, defined by rules and regulations and informal, materialized in business practices or ethical codes. The paper intends to assess the compliance level with corporate governance principles in case of Financial Investment Companies as institutional investors traded on Romanian capital market (Bucharest Stock Exchange). The research methodology mainly consists in processing data obtained from questioners addressed to these investment companies as well as observing corporate governance statements issued by each of these entities. As presented in the conclusion section, the authors reached valuable conclusions regarding a satisfactory compliance level with corporate governance requirements that apply to Financial Investment Companies.
Key words: Financial Investment Companies, corporate governance, principles, ethical codes, regulations
JEL codes: M42, M14
Introduction
Successful implementation of corporate governance principles and requirements depends on the degree of reliability and trust allocated to corporate entities, provided that cooperation and responsibility are being required. In current business environment, corporate governance has become necessary since it ensures a certain level of trust required for a properly functioning market economy (OECD Corporate Governance Principles, 2004), reducing information risk and cost of capital and an efficient use of resources. Under this approach, transparencies in relation with investors, as well as the quality of financial reports submitted, reflect primordial factors that can significantly influence the decision to assume a certain level of risk associated with financial investments (Danescu & Spatacean, 2008).
The importance of corporate governance principles and rules that are being required for Financial Investment Companies has been consolidated through specific regulations, inspired both from the national law (Company Law, Accounting Regulations, Capital Market Law, Regulations issued by the National Securities Commission) and international law (European Directives, Corporate Governance Codes, OECD Principles, etc.). Disclosure and presentation of adequate information related to Financial Investment Companies are considered both relevant tools for monitoring management, as well as significant factors that may strongly influence the evolution of stock market prices. Under the circumstances in which investors have no or little confidence in financial reporting process or non-financial disclosures, they will seek alternative investments.
The paper's main research objective is to identify the compliance level of current...