Corporate Governance Quality

in Selected Transition Countries

Danila Djokić
University of Primorska, Slovenia
[email protected]
Mojca Duh
University of Maribor, Slovenia
[email protected]

Important questions that concern the notion of good corporate governance

focus on what good corporate governance is, who benefits from good cor-
porate governance, and how corporate governance quality can be mea-
sured. The aim of our study was to broaden our understanding of the role
of standards and codes of good corporate governance in improving gover-
nance practices. We found that not only formal regulations, standards, and
governance codes, but also corporate governance indices-which make the
assessment of companies’ governance practices possible-are important in
measuring and improving governance quality. The results of the research
based on the seecgan Index methodology indicated that mandatory re-
quirements and voluntary recommendations of high governance standards
had a positive impact on the corporate governance practice in Slovenia.
Key Words: corporate governance, index, quality, transition country
jel Classification: g34, p20

Introduction
Numerous cases of fraud, accounting scandals, and other business fail-
ures in companies worldwide, often leading to lawsuits or even bankrupt-
cy, have made corporate governance an extremely important topic in aca-
demic and professional discussion and research. Behind these cases is an
assumption that the major cause of these problems lies in bad corporate
governance (Larcker and Tayan 2011). In order to prevent such deviations
in corporate governance, several formal regulations (i.e., hard law) as well
as informal guidelines, recommendations and codes (i.e., soft law), and
standards have been developed on the national and global level. Many
of them have been proposed and established by different professional
and international associations (e.g., oecd, ecgi, ifac, sac, iaasb) in
different fields (e.g., legal, accounting, audit). Their main purpose is to

Managing Global Transitions 14 (4): 335–350

336 Danila Djokić and Mojca Duh

determine basic rules and recommendations of good governance. Their

abundance and content differ across national economies, reflecting the
specifics of the national economy as well as the prevailing governance sys-
tem (e.g., ‘shareholder centric’ in the uk and us or ‘stakeholder centric’
in Germany). However, some research studies have shown that systems
of corporate governance in different surroundings have been converged
(Nestor and Thompson 1999; Martynova and Renneboog 2010).
The main questions that we address in this paper are how a quality cor-
porate governance system of a particular company or state can be defined,
explained, and developed; which criteria should be considered in assess-
ing corporate governance quality; and who should recognize the quality
in order for investors to approve it and react. We focus our empirical re-
search on transition economies where we are lacking in-depth insights
into the specifics of corporate governance practices and their quality (Zat-
toni and Van Eees 2012; Kumar and Zattoni 2015).
In light of the previously stated research questions, we have structured
our contribution in several chapters. The first chapter introduces the is-
sues. In the second chapter, we explore some global approaches for im-
proving the quality of corporate governance, among which special atten-
tion is devoted to standardization, corporate governance codes and ‘com-
ply or explain’ principles, and different attempts to measure the corporate
governance quality. In particular, we explore the most recent approach
to measuring corporate governance quality using the seecgan Index,
developed to address special circumstances in transition countries. In
the third chapter, we present research on the corporate governance qual-
ity using the case of Slovenia. We discuss the research results related to
the quality of corporate governance measured by the seecgan Index in
Slovenia and provide findings from the comparative analysis of corporate
governance with a selected transition country. We conclude our contri-
bution with cognitions on expected future development in this field.

Good Corporate Governance

Good corporate governance is expected to reduce agency costs and infor-
mation asymmetry stemming from separation between ownership and
control (Bauwhede and Willekens 2008; Healy and Palepu 2001). Sound
corporate governance is characterized by effective monitoring and dis-
ciplining mechanisms that should prevent the opportunistic behaviour
of top managers (Renders, Gaeremynck and Sercu 2010; Tipurić et al.
2016) and provide a framework for the protection of shareholder inter-

Managing Global Transitions

 Corporate Governance Quality in Selected Transition Countries 337

ests (Patel and Dallas 2002). It encourages excellence and the optimal use
of available resources, leading to improved company performance (Ren-
ders, Gaeremynck and Sercu 2010).
Traditionally, the governance literature has defined two governance
systems. The open (Anglo-American) system of corporate governance is
characterized by a fragmented ownership structure, an active market for
corporate control, strong shareholders rights, and short-term equity fi-
nancing. The closed (Central European) system of corporate governance
is characterized by long-term debt financing, concentrated block holder
ownership, inactive markets for capital control, and a substantial role of
banks (La Porta, Lopez-de-Silanes, and Shleifer 1999; Larcker and Tayan
2011; Renders and Gaeremynck 2012). Solutions for corporate governance
problems differ in these two systems. The market for corporate control
and managerial compensation are prevalent mechanisms in the open sys-
tem of corporate governance. In the closed system, control by large share-
holders together with the board is the dominant mechanism for aligning
the interest of managers and owners (Larcker and Tayan 2011; Tipurić et
al. 2016).

standards and principles of good corporate

governance
The oecd (2015) traditionally establishes standards, principles, and rec-
ommendations for good corporate governance. The proper and good
execution of the competences of the management bodies are presented
and explained in different corporate governance codes worldwide. Pro-
fessional accounting, auditing, and other organizations (ifac, iasb, etc.)
prepare the accounting and auditing standards that should be followed
by internal and external auditors in order to establish and/or supervise
the execution of the competence of the different management bodies of
the corporations. The assessment of the quality of the particular process
of the production, services, organisation, etc., is also realized by quality
standards such as iso 9000, iso 14000, iso 26000, and efqm.
iso 14001 concerns the field of environmental management systems,
environmental assessment, environmental performance evaluation, etc.
Derivative standards derived from this standard are conducted to meet
the requirements. iso 14030+ represents the direction to achieve the per-
formance and control of environmental management systems. All this
concerns the attitude and conduct of the management of public compa-
nies regarding the environment and includes issues of reporting to share-

Volume 14 · Number 4 · Winter 2016

338 Danila Djokić and Mojca Duh

holders as well as the enforcement of sustainable development policies of

public companies).
iso 26000 (International Organization for Standardization 2010) stan-
dard on social responsibility concerns organizations’ activities to imple-
ment social responsibility. This standard started to develop more inten-
sively in 2010. It provides only guidelines regarding the operation of the
management bodies, which at this stage of development cannot yet be
certified. Instead, this standard clarifies the concept of social responsibil-
ity and its contents. This allows businesses and organizations to follow the
principles of social responsibility and translate them into measures pro-
viding the best management practices in the field of social responsibility
(iso 26000).
All such activities need to be reported to the shareholders. The obli-
gations to report non-financial data have recently been demanded at the
European Union level as well. The tendencies to standardize the reporting
of non-financial aspects are detected in the terms of Accounting Directive
2013/34/eu (The European Parliament and the Council of the European
Union 2013).
The assessment of practices and standardized operations of enterprises
in several directions, not just in terms of production processes, are taking
the path to the future (iso 26000). They raise the question of how to re-
port the demands and the pursuit of excellence to shareholders, which are
corporate governance matters. Information for investors about the meth-
ods and consideration of the factors of the environment and sustainability
are becoming increasingly important for stakeholders as well. They con-
cern questions of the quality of the general leadership and management
of companies and the costs created in these processes. They concern the
general attitudes about corporate governance.
oecd 2015 principles of corporate governance target the following
topics to enable equitable and fair relationships and treatments:
• Ensuring the basis for an effective corporate governance framework.
• The rights and equitable treatment of shareholders and key owner-
ship.
• Institutional investors, stock markets, and other intermediaries.
• The role of stakeholders in corporate governance.
• Disclosure and transparency.
• The responsibilities of the board.

Managing Global Transitions

 Corporate Governance Quality in Selected Transition Countries 339

oecd principles 2015 stress the importance of high ethical standards,

stating they are in the long-term interests of the company as a means to
make it credible and trustworthy-not only in day-to-day operations, but
also with respect to longer-term commitments. The overall framework
for ethical conduct goes beyond compliance with the law, which should
always be a fundamental requirement.

cg codes and ‘comply or explain’ principle

Corporate governance (cg) codes play a crucial role in improving cor-
porate governance practice (Nowland 2008). In most eu member states,
compliance with cg codes and disclosure on corporate governance sys-
tems and practices are largely voluntary and based on the ‘comply or ex-
plain’ principle. The ‘comply or explain’ approach is the most common
approach to corporate governance in the world. In addition to the eu
member states, it is applied in Australia, New Zealand, Singapore, Hong
Kong, and many other countries. The main idea of establishing and us-
ing cg codes stems from differences in the type and severity of agency
costs that reflect the companies’ ownership and control structures. As the
ownership and control structures differ across countries and industries,
corporate governance regulations (i.e., mandatory and voluntary ones)
and practices should reflect such differences.
Another approach for regulating corporate governance is the ‘one size
fits all’ corporate governance regulation, which is the legislated manda-
tory governance model (e.g., the most well-known version is the sox-
based regime in the us) that prescribes the same corporate governance
practices for all types of companies (Bauwhede and Willekens 2008; Luo
and Salterio 2014; Renders and Gaeremynck 2012). In Asian countries,
considerable pressure has been placed on companies to improve gover-
nance practices due to the crisis. Voluntary corporate governance codes
have been established in order to encourage companies to improve their
governance and transparency practice and disclose more information in
a timelier manner to different groups of stakeholders (Nowland 2008).
In Slovenia, the first cg code (i.e., Code of Governance of Public Com-
panies) came into force in March 2004. The Ljubljana Stock Exchange,
the Managers’ Association of Slovenia, and the Slovenian Directors’ As-
sociation adopted it. Several changes were introduced in 2005 and 2007;
in 2009, a new code (Ljubljanska borza 2009) was enforced and is still
in power in Slovenia. The provisions of the Slovenian cg Code have the
nature of recommendations, which are not legally binding; the main pur-

Volume 14 · Number 4 · Winter 2016

340 Danila Djokić and Mojca Duh

pose of this code is to define in more detail the governance and man-
agement principles of public companies and to recommend such princi-
ples to companies that have not gone public, but have the form of a joint
stock company. Public companies should disclose any deviations from
this code and reasons for them. Non-public joint stock companies that
base their corporate governance statement on the Slovenian cg Code
(Ljubljanska borza 2009) must also disclose all such deviations follow-
ing the ‘comply or explain’ principle.
Few analyses have been carried out regarding the implementations of
the cg codes in Slovenia (Djokić 2012; Ljubljanska borza 2012; 2015). The
Ljubljana Stock Exchange, together with the Slovenian Director’s Associ-
ation, conducted the last analysis on the disclosure of the explanations of
deviations from the Slovenian cg Code (Ljubljanska borza 2009) of the
corporations between 2011 and 2014. A much bigger sample of companies
was included in the analysis than in the previous one (i.e., 58 companies
for 2011 and 2013, 57 companies for 2012, and 60 companies in 2014, all
listed on the Ljubljana Stock Exchange). The results of the analysis show
that the number of companies using the Slovenian cg Code (Ljubljanska
borza 2009) increased from 63.8 in 2011 to 71.7 in 2014. The great ma-
jority of companies do not use any other corporate governance codes,
even though the law enables such a solution. The average compliance
with the Slovenian cg Code (Ljubljanska borza 2009) was 89.8 in 2011,
90.6 in 2012, 89.9 in 2013, and 89.8 in 2014. Half of the most frequent
deviations are those from the transparency principles and recommenda-
tions. The results of the analysis show several improvements in corporate
governance practice in Slovenia that follow the regulations of the legisla-
tion (i.e., Companies Act) and the provisions of the Slovenian cg Code
(Ljubljanska borza 2009).

corporate governance ratings and indices

The idea of measuring corporate governance quality is a relatively new
concept, and several approaches have been developed thus far (Daines,
Gow, and Larcker 2009; Larcker and Tayan 2011; Renders, Gaeremynck,
and Sercu 2010; Tipurić, Dvorski, and Delić 2014). One group of these ap-
proaches uses the form of ratings; numerous examples have been devel-
oped by consulting companies (e.g., Risk Metrics/iss, Governance Met-
rics International/gmi, and the Corporate Library/tcl). The major pur-
pose of such approaches is to rank companies by applying a set of corpo-
rate governance criteria. Companies with higher ratings are considered

Managing Global Transitions

 Corporate Governance Quality in Selected Transition Countries 341

to be less risky and the most likely to grow the value for shareholders
whereas those with lower ratings are believed to be riskier and have a
higher potential for failure or fraud (Larcker and Tayan 2011). Some re-
search results (Renders, Gaeremynck, and Sercu 2010) show a positive re-
lationship between corporate governance ratings and performance. Nev-
ertheless, Daines, Gow, and Larcker (2009) believe that commercial rat-
ings do not provide useful information for shareholders as they ‘do not
predict governance-related outcomes with the precision or strength nec-
essary to support the bold claims made by most of these firms’ (p. 1). Ac-
cording to Larcker and Tayan (2011), the accuracy and predictive power of
different ratings have not yet been proven. In the authors’ opinion, ratings
encourage a ‘check-the-box’ approach to governance while overlooking
important contexts. The authors suggest that measuring corporate gov-
ernance quality should be approached on a case-by-case basis that con-
siders the interaction of various governance structures influencing the
company’s performance.
Another group of approaches takes the form of indices. Academic re-
searchers in particular have been trying to develop models to measure
corporate governance quality (Larcker and Tayan 2011). Corporate gov-
ernance indices differ regarding governance dimensions incorporated in
a particular index (Tipurić, Dvorski, and Delić 2014). Academics usually
incorporate those governance dimensions in indices that they find to be
an important component of good corporate governance practice (Bha-
gat and Bolton 2008; Larcker and Tayan 2011). A corporate governance
index should make possible a comparison of a company’s corporate gov-
ernance practice with governance regulations and recommendations that
are considered to be examples of the best governance practices (Tipurić,
Dvorski, and Delić 2014).
According to Tipurić et al. (2016), there are several reasons for the de-
velopment and implementation of corporate governance indices. First,
corporate governance indices could significantly contribute to the gover-
nance regulatory framework and companies by providing an incentive to
adopt better practices of corporate governance. Second, a corporate gov-
ernance index calculated for a particular company provides important
information to the investment community and other groups of key stake-
holders. Third, companies with a higher index (i.e., with better assessed
corporate governance practice) can develop on this basis a competitive
differentiation in the market and consequently long-term business suc-
cess and survival.

Volume 14 · Number 4 · Winter 2016

342 Danila Djokić and Mojca Duh

The seecgan Index and Its Application

in Transition Countries
the seecgan index methodology
The beginnings of the application of the seecgan Index of Corporate
Governance for measuring corporate governance dates back to 2014,
when the index was published as the result of research efforts of the
members of the South East Europe Corporate Governance Academic
Network. At the time, members were invited to apply the seecgan In-
dex methodology in their countries in order to make possible compar-
isons of corporate governance practice and its quality in South Eastern
European countries (i.e., Croatia, Bosnia and Herzegovina, Serbia, Mon-
tenegro, Slovenia, and Macedonia). The application of this methodology
not only enables an in-depth study of governance practice and its qual-
ity in a particular company, but also provides insights into the quality of
corporate governance within a national economy and makes it possible
to compare governance practice among those countries where the same
methodology is applied. This is especially important for former socialist
countries sharing many historical, cultural, political, and economic sim-
ilarities that make such comparison a fruitful approach for improving
corporate governance practice and quality.
In order to provide comprehensive insights into such a complex phe-
nomenon as corporate governance and to assess its quality, the seecgan
Index methodology is based on seven broad categories believed to re-
flect the major corporate governance areas. These categories are (Tipurić,
Dvorski, and Delić 2014; Tipurić 2015): (1) structure and governance of
boards, (2) transparency and disclosure of information, (3) shareholders’
rights, (4) corporate social responsibility, (5) audit and internal control,
(6) corporate risk management, and (7) compensation/remuneration.
In the case of Slovenia, the first category is divided into two subcate-
gories (i.e., structure and governance of management board, and struc-
ture and governance of supervisory board) in order to reflect the coun-
try’s specifics. Namely, the legal framework in Slovenia enables joint-
stock companies to decide between a one-tier or a two-tier governance
system. In the case of a two-tier governance system, two separate boards
exist in a corporate structure system: the management board and the
supervisory board (Djokić et al. 2015; Tipurić et al. 2016).
For each of the previously mentioned categories, several questions
were prepared for measuring purposes; each question can be answered

Managing Global Transitions

 Corporate Governance Quality in Selected Transition Countries 343

in the affirmative or negative in order to ensure objectivity (Patel and

Dallas 2002; Tipurić 2015). A ponder is assigned to each question be-
cause the seecgan Index is developed as a weighted index. The score is
then calculated for each category, presenting an index of that particular
category, where the maximum score is 10 (describing the best possible
practice) and the minimum score is zero (describing the worst possible
practice). The overall seecgan Index score is the average value of scores
of all seven categories, with zero being the lowest value and 10 being the
maximum index value. The seecgan Index methodology enables the
classification of the explored companies in different groups based on
their index score (either of a particular category or for all categories).
First-class companies are those where the value of the seecgan Index
is equal to or higher than 7.5. Companies with good governance practice
are those where the value of index is equal to or higher than 5.00 and
lower than 7.5. Companies with unsatisfactory governance are those with
the index value equal to or higher than 2.5 and lower than 5.00, and com-
panies with poor governance practice have an index value lower than 2.5
(Tipurić 2015).
corporate governance quality in selected
transition countries
Sampling and Data Collection
During 2014–2015, the seecgan Index methodology was applied in
three countries: Slovenia, Croatia, and Macedonia. A comparison of cor-
porate governance practices among these three countries is possible and
worth exploring because, in all three countries, the closed system of
corporate governance is present and they have similar historical back-
grounds. However, there are some indications that they differ regarding
the developmental level of corporate governance mechanisms (Tipurić et
al. 2016).
Research in Slovenia was done on a sample of 22 public companies
listed in June 2014 on the Ljubljana Stock Exchange. Of these 22 com-
panies, nine were companies of the prime market and 13 of the stan-
dard market (Djokić et al. 2014). The standard market is intended for
larger companies that have a dispersed ownership structure and high lev-
els of transparency of their operations while the prime market is a pres-
tigious market intended for larger established companies renowned for
their liquidity and transparency of operations (see http://www.ljse.si/cgi-
bin/jve.cgi?doc=8371). Companies’ annual reports were the major source

Volume 14 · Number 4 · Winter 2016

344 Danila Djokić and Mojca Duh

of data. These annual reports also comprise corporate governance state-

ments, in which companies disclose their compliance with the Slove-
nian Corporate Governance Code. Additional data were collected from
the companies’ websites (internal acts of the management boards, doc-
uments, reports, information for different groups of stakeholders). Gov-
ernance practice for every company from the sample was assessed using
98 attributes based on the seecgan Index methodology. The results of
the assessments were stored in computer files. The database (Djokić et al.
2014) for our study was created this way to enable an in-depth investi-
gation of governance practice of a particular company and comparisons
among companies from the sample as well as comparisons with countries
that applied the same index methodology (i.e., Croatia and Macedonia).
In Croatia, 32 firms listed on the Zagreb Stock Exchange participated in
the survey by responding to a questionnaire prepared based on the seec-
gan Index methodology. Half of the surveyed companies were listed on
the official market and half on the regular market (Tipurić 2015). In Mace-
donia, 29 companies were included in the ongoing research (Vrboski and
Hadzivasileva Markovska 2016; Tipurić et al. 2016). Research teams anal-
ysed responses and collected additional information from the companies’
websites; when needed, interviews with responsible persons were con-
ducted.

Results and Discussion

In this section we present research results on the corporate governance
quality for Slovenia and the results of a comparative analysis with Croatia,
for which detailed results were published in 2015 (Tipurić 2015). A com-
parative analysis with Macedonia was able only on the aggregated level
because not all detailed results are available yet.
The average seecgan Index score of the listed companies in Slovenia
is 5.49 (figure 1). Thus, the average listed company in Slovenia is charac-
terized by good corporate governance practice. The best first-class com-
pany in terms of governance quality achieved an 8.16 seecgan Index
score while the lowest score was 2.26, indicating the presence of poor
governance practice in that company. Research results show that half of
the surveyed companies in Slovenia have a seecgan Index score greater
than 5.26. That is true for the majority of prime market companies, lead-
ing to the conclusion that mandatory requirements and voluntary rec-
ommendations for the presence of high corporate governance standards-
especially for prime market companies-actually have a positive impact on
corporate governance practices.
Managing Global Transitions
 Corporate Governance Quality in Selected Transition Countries 345












sk
sk

sk
sk
sk
sk
sk
sk
sk
sk
pk
sk
sk
sk
pk

pk
pk

pk
pk
pk
pk
pk
figure 1 Companies’ and Average Corporate Governance Index for Slovenia Based
on the seecgan Index Methodology (dark – company’s cg Index, light –
average cg Index, pk – prime market companies, sk – standard market
companies)












sk
sk

sk
sk
sk
sk
sk
sk
sk
sk
pk
sk
sk
sk
pk

pk
pk

pk
pk
pk
pk
pk

figure 2 Companies’ and Average Index in Risk Management Category (dark –

company’s Category Index, light – average Category Index, pk – prime
market companies, sk – standard market companies)

Companies achieved the highest average index score in the risk man-
agement category (figure 2). The average company was assessed as a first-
class company in this corporate governance category with an index score
of 7.61. Half of the companies in this category have index scores higher
than 8.75, indicating the first-class practice of risk management in such
companies. Six companies (four prime market and two standard market
companies) achieved the maximum index score in this category; all six
Volume 14 · Number 4 · Winter 2016
346 Danila Djokić and Mojca Duh











sk
sk
sk
sk
sk
sk

sk
sk
sk

sk
sk

sk
sk
pk

pk

pk
pk

pk
pk
pk
pk
pk
figure 3 Companies’ and Average Index in Social Responsibility Category (dark –
company’s Category Index, light – average Category Index, pk – prime
market companies, sk – standard market companies)

companies were also above average for the total index score (see figure
1). The lowest score in this category was 3.13, indicating unsatisfactory
risk management practices in that company (sk1). This was achieved in
the company ranked as having the worst corporate governance practice
among all the companies in the sample.
The category in which surveyed companies display poor and unsatis-
factory governance practice is the social responsibility category (figure
3). An average company has unsatisfactory social responsibility practice,
with an index score of 3.66 in this category. In this category, we can ob-
serve the highest deviation from the mean (2.55), and two companies
even achieved a 0.00 index score. Seven companies were evaluated as
having poor social responsibility practice, with an index score ranging
from 0.00 to 1.90. Among these companies, one company (sk11) achieved
an above average total cg index score. The by far best result in this cat-
egory was company pk9 (with an index score of 8.57), which was also
the highest ranked company on the total cg index. The results in this
category indicate that, on one hand, academics’ and professionals’ spe-
cial attention is needed on how to improve social responsibility practice;
on the other hand, the seecgan Index methodology should be checked
for this category and eventually improved. This could be done by using
an in-depth study of individual cases and comparing the results and ex-
periences among participating countries that apply the seecgan Index
methodology in this category.

Managing Global Transitions

 Corporate Governance Quality in Selected Transition Countries 347

table 1 Corporate Governance Index in Slovenia and Croatia

Based on the seecgan Index Methodology
seecgan Index Slovenia Croatia
Total . .
Transparency and Disclosure of Information . .
Structure and Governance of Supervisory Board . .
Structure and Governance of Management Board .
Shareholders’ Rights . .
Corporate Social Responsibility . .
Corporate Risk Management . .
Compensation/Remuneration . .
Audit and Internal Control . .

A cross-country comparison shows that corporate governance practice

in Slovenia is better evaluated than in Croatia and Macedonia. Compa-
nies in Croatia have on average unsatisfactory governance practice, with
an index score of 3.91 (Tipurić 2015). The same is true for Macedonia
as well, where the average seecgan Index is 4.09 (Vrboski and Hadzi-
vasileva Markovska 2015). The comparison of research results between
Slovenia and Croatia indicates better corporate governance practice in
all the seecgan Index categories in Slovenian companies with the ex-
ception of the social responsibility category (table 1). This is the low-
est ranked category in Slovenia, while in Croatia social responsibility is
ranked as the fourth best evaluated governance category. A comparison
of the risk management category, where Slovenian companies on average
have first-class practice and the category itself is ranked as the best evalu-
ated category, shows that this category in Croatian companies ranks fifth
(lower than social responsibility category), with an average index score
of 3.87. The risk management category has the biggest differences among
Slovenian and Croatian companies. A comparison of the research results
between Slovenia and Croatia indicates that several differences exist in
the corporate governance practice, calling attention to need for a more
detailed analysis of particular categories and cases.

Conclusions
The state and quality of the corporate governance have been presented
and evaluated in a particular company using different standards and prin-
ciples or indexes and methodologies, which concern good practice and

Volume 14 · Number 4 · Winter 2016

348 Danila Djokić and Mojca Duh

show as well as measure the execution of the competences of the gover-

nance and management bodies in practice while also expressing the level
of corporate governance. The results of corporate governance can also be
summarized at the national level to provide investors, shareholders, and
stakeholders with faster and more efficient access to the information on
corporate governance.
The use of the seecgan Index and corresponding methodology in
this article provided insights into the corporate governance practice and
its quality on the national level, thereby pointing to those areas needing
improvements by either mandatory or voluntary regulations and recom-
mendations. The use of the same methodology in a similar context (i.e.,
in Slovenia, Croatia, Macedonia) enabled comparisons of the state of gov-
ernance across these transition countries as well as the analysis of differ-
ences and similarities. Our cross-countries comparison showed that cor-
porate governance practice in Slovenia is of better quality than in Croatia
and Macedonia. However, despite this finding, our research results show
that improvements are required in Slovenian companies, especially in
those corporate governance segments where governance practice is eval-
uated as unsatisfactory. These segments need additional research, either
as case studies or as the exploration of good practices in an international
context with similar contexts. This should serve to develop proposals of
measures to improve corporate governance practices at the company as
well as national level.

References
Bauwhede, H. V., and M. Willekens. 2008. ‘Disclosure on Corporate Gov-
ernance in the European Union.’ Corporate Governance: An Interna-
tional Review 16 (2): 101–15.
Bhagat, S., and B. Bolton. 2008. ‘Corporate Governance and firm Perfor-
mance.’ Journal of Corporate Finance 14 (3): 257–73.
Daines, R. M., I. D. Gow, and D. F. Larcker. 2009. ‘Rating the Ratings: How
Good Are Commercial Ratings?’ Rock Center for Corporate Gover-
nance at Stanford University Working Paper Series 1, Stanford Univer-
sity, Stanford, ca.
Djokić, D. 2012. ‘Development of Disclosure and Transparency as Legal
Methods for the Supervision of Public Companies in the Republic of
Slovenia.’ Management 7 (2): 173–86.
Djokić, D., B. Kladnik, P. Martinčič, and M. Duh M. 2014. ‘The seec-
gan Research – Slovenia.’ University of Primorska, Koper; University
of Maribor, Maribor.

Managing Global Transitions

 Corporate Governance Quality in Selected Transition Countries 349

Djokić, D., M. Duh, B. Kladnik, and P. Martinčič. 2015. ‘Corporate Gover-

nance in Slovenia: Measuring Quality by Applying the seecgan in-
dex.’ In Proceedings of the 6th Global Conference on Managing in Recov-
ering Markets, edited by A. Kavkler and K. Logožar, 207–18. Maribor:
Faculty of Economics and Business.
Healy, P. M., and K. G. Palepu. 2001. ‘Information Asymmetry, Corporate
Disclosure, and the Capital Markets: A Review of the Empirical Disclo-
sure Literature.’ Journal of Accounting and Economics 31 (1–3): 405–40.
International Organization for Standardization. 2010. iso 26000:2010;
Guidance on Social Responsibility. Geneva: International Organization
for Standardization.
Kumar, P., and A. Zattoni. 2015. ‘In Search of a Greater Pluralism of Theo-
ries and Methods in Governance Research.’ Corporate Governance: An
International Review 23 (1): 1–2.
Larcker, D., and B. Tayan. 2011. Corporate Governance Matters. Upper Sad-
dle River, nj: Pearson Education.
La Porta, R., F. Lopez-de-Silanes, and A. Shleifer. 1999. ‘Corporate Owner-
ship Around the World.’ Journal of Finance 54 (2): 471–517.
Ljubljanska borza. 2009. ‘Kodeks upravljanja javnih delniških družb.’ http:
//www.ljse.si/media/Attachments/Izdajatelji/Kodeks_veljaven
_8122009_koncna_verzija.pdf
———. 2012. ‘Analiza razkritij odstopanj v izjavah o skladnosti s kodek-
som.’ http://www.ljse.si/media/Attachments/Izdajatelji/Analiza
_razkritij_odstopanj_izjav_CG_2012_internet.pdf
———. 2015. ‘Poročilo o analizi skladnosti s kodeksom upravljanja javnih
delniških družb v Sloveniji za obdobje 2011–2014.’ http://seonet.ljse.si/
?doc=LATEST_PUBLIC_ANNOUNCEMENTS&doc_id=58513
Luo, Y., and S. E. Salterio. 2014. ‘Governance Quality in a Comply or Ex-
plain Governance Disclosure Regime.’ Corporate Governance: An In-
ternational Review 22 (6): 460–81.
Martynova, M., and L. D. R. Renneboog. 2010. ‘A Corporate Governance
Index: Convergence and Diversity of National Corporate Governance
Regulations.’ center Discussion Paper 2010-17, Tilburg University,
University.
Nestor, S., and J. K. Thompson. 1999. ‘Corporate Governance Patterns in
oecd Economies: Is Convergence under Way?’ http://www.oecd.org/
dataoecd/7/10/1931460.pdf
Nowland, J. 2008. ‘The Effect of National Governance Codes on Firm Dis-
closure Practices: Evidence from Analyst Earnings Forecasts.’ Corpo-
rate Governance: An International Review 16 (6): 475–91.
oecd. 2015. g20/oecd Principles of Corporate Governance. Paris: oecd.
Patel, S. A., and G. Dallas. 2002. ‘Transparency and Disclosure: Overview

Volume 14 · Number 4 · Winter 2016

350 Danila Djokić and Mojca Duh

of Methodology and Study Results – United States.’ Standard & Poor’s,

New York.
Renders, A., and A. Gaeremynck. 2012. ‘Corporate Governance, Principal-
Principal Agency Conflicts, and Firm Value in European Listed Com-
panies.’ Corporate Governance: An International Review 20 (2): 125–43.
Renders, A., A. Gaeremynck, and P. Sercu. 2010. ‘Corporate-Governance
Ratings and Company Performance: A Cross-European Study.’ Corpo-
rate Governance: An International Review 18 (2): 87–106.
The European Parliament and the Council of the European Union. 2013.
‘Directive 2013/34/eu of the European Parliament and of the Coun-
cil of 26 June 2013 on the annual financial statements, consolidated
financial statements and related reports of certain types of under-
takings, amending Directive 2006/43/ec of the European Parliament
and of the Council and repealing Council Directives 78/660/eec and
83/349/eec.’ Official Journal of the European Union l 182/19-76.
Tipurić, D. 2015. Korporativno upravljanje u Hrvatskoj. Zagreb: ciru.
Tipurić, D., K. Dvorski, and M. Delić. 2014. ‘Measuring the Quality of Cor-
porate Governance – A Review of Corporate Governance Indices.’ Eu-
ropean Journal of Economics and Management 1 (1): 234–52.
Tipurić, D., M. Mešina, A. Čeh Časni, D. Djokić, M. Duh, V. Hadži
Vasileva-Markovska, P. Vrboski, and M. Lovrinčević. 2016. ‘The Dif-
ferences in Board Structure and Composition in Croatia, Macedonia
and Slovenia.’ In New Governance for Value Creation: Towards Stake-
holding and Participation; Proceedings of the 4th International ofel
Conference on Corporate Governance, Management and Entrepreneur-
ship, edited by D. Tipurić and I. Kovač, 231–47. ciru: Zagreb.
Vrboski, P., and I. Hadzivasileva Markovska. 2015. ‘seecgan Study in
Macedonia – 2014.’ Macedonia Institute of Directors, Skopje.
Zattoni, A., and H. Van Eees H. 2012. ‘How to Contribute to the Devel-
opment of a Global Understanding of Corporate Governance? Reflec-
tions from Submitted and Published Articles in cgir.’ Corporate Gov-
ernance: An International Review 20 (1): 1–2.
This paper is published under the terms of the Attribution-
NonCommercial-NoDerivatives 4.0 International (cc by-nc-nd 4.0)
License (http://creativecommons.org/licenses/by-nc-nd/4.0/).

Managing Global Transitions