Corporate Governance in Transitional Economies The Case of Code of Corporate Governance

Abstract

The role of corporate governance is manifested in: creating value for the corporation and supporting transparency; protecting shareholders' rights and ensuring their equal treatment, acknowledging the interests of all entities that develop relationships with the company, assuming responsibility by the Board of Directors, integrity and ethical behaviour, transparency in implementing internal and external control systems to certify the validity of corporate financial reports. In this review which is a collection of volume of research on corporate governance the significance of effective corporate governance is being evident. The aim of the review done is to check the effectiveness of corporate governance through the code of corporate governance in some company. Corporate Governance is a broad term defines the methods, structure and the processes of a company in which the business and affairs of the company managed and directed. Corporate governance also enhances the long term shareholder value by the process of accountability of managers and by enhances the firm’s performance. It also eliminate the conflict of ownership and control by separately defines the interest of shareholders and managers. Corporate governance has come to the forefront of academic research due to the vital role it plays in the overall health of economic systems. The wave of U.S. corporate fraud in the 1990s was attributed to deficiencies in corporate governance. The recent 2008-2009 global financial crisis, triggered by the unprecedented failure of Lehman Brothers and the subprime mortgage problems, renewed interest in the role corporate governance plays in the financial sector. The development of a strong corporate governance framework is important to protect stakeholders, maintain investor confidence in the transition countries and attract foreign direct investment. Corporate governance concerns the design of decision-making structures relating to a firm's choice of new investment projects and the operation of its existing ones. In this paper we will se the process of implementation of code of corporate governance. The development of a strong corporate governance framework is important to protect stakeholders, maintain investor confidence in the transition countries and attract foreign direct investment. Corporate governance concerns the design of decision-making structures relating to a firm's choice of new investment projects and the operation of its existing ones. The purpose of this study is to contribute for Albanian state, central and Eastern Europe countries to understand the importance of the Code of corporate governance and its role in each organization.

Keywords:corporate governance, agency theory, ownership, shareholders, managers, Code, etc.