Transparency and Disclosure Practices in Selected Post-Transition Economies

Abstract

The paper uses the methodology introduced by Standard & Poor’s to assess the level of transparency and disclosure exercised by the recently privatized companies from three Balkan countries: Croatia, Serbia and Macedonia. The procedure involves a thorough examination of the corporate websites to check for the presence of a list of 98 disclosure items. The results show that although the disclosure practices are gradually being improved, they still lag behind those of the older market economies. Additionally, the companies from the financial sector score considerably better than the average and the disclosure of management and governance data are the weakest point in each of the analysed countries. Companies with large shareholders owning sizable stakes are less prone to disclose. Preparation and publishing of classical annual reports is a rare practice and the companies seem to be more comfortable with disclosing data which are already made publicly available through other institutions. We find the reasons for this behaviour in the lack of relevance of the stock market information for the future of the companies and their management, which, in turn, has negative consequences for the development of the same stock markets.

Keywords: corporate governance, transparency, disclosure, post-transition, privatization, Macedonia, Serbia, Croatia.