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IMPORTANCE OF CORPORATE GOVERNANCE FOR UKRAINE

21.03.2020 18:17

[Секция 2. Менеджмент]

Автор: Lytvynenko Olena Dem'yanivna, candidate of economics, associate professor, Associate Professor of the Department of Marketing, Management and trade entrepreneurship of Kharkov Trade and Economics Institute of Kyiv National Trade and Economics University


The evolution of the world economy led to the emergence and development of corporate governance as a new form of management that meets the modern requirements of business organization.

Corporate governance is not only limited to the relationship between investors and managers, and also involves taking into account the consideration of legitimate interests and active cooperation with stakeholders, who have a legitimate interest in the company's activities (employees, consumers, creditors, the state, the public, etc.) [1]. The value of corporate governance for the company manifests itself in its impact on increased competitiveness and economic efficiency by the provision of: adequate attention to shareholders interests; balance of the corporate relations participants interests; financial transparency; implementation of effective management rules and proper control.

In the OECD (Organization of Economic Cooperation and Development) recommendation document («Principles of Corporate Governance» [2]) and national Corporate governance principles [3] identified the principal positions of the corporations missions that are based on these common elements. They are formulated to cover the various existing models.

Subsequently, individual reports, principles and codes of corporate governance were developed in individual countries. That are designed to convince investors (primarily minority) that companies will act in the interests of the shareholders and give them opportunities for prompt receipt of sufficient information about the state of affairs in companies. International organizations, associations of investors, Governments of different countries and companies adopted about 90 corporate governance codes, which is a summary of standards that are voluntarily accepted and internal norms set the procedure corporate relations. The basis of corporate governance codes make recommendations on the main issues of corporate relations. There is no single model of effective corporate governance. Meanwhile, work carried out in the OECD allowed to reveal some common elements underlying corporate governance [4].

Given the experience of creating shareholder control mechanisms in the United States, Germany and other developed countries as well as the internal features of the joint-stock business development in Ukraine, it is possible to outline the directions of building a national model of corporate governance.

Among the important factors that influence the formation of the national corporate governance model, it is necessary to distinguish:

– shareholding structure in corporations;

– specifics of the financial system as a whole as a mechanism of savings transformation into investments (types and distribution of financial contracts, financial markets position, types of financial institutions, role of banking institutions);

– ratio of sources of the corporation financing;

– macroeconomic and economic policy in the country;

– the political system [5].

In the Ukrainian corporate governance model of the board of directors (Supervisory board), carrying out the function of control over management should itself remain the object of control. For the majority of large Ukrainian joint-stock companies, the following groups of participants in the relations that make the substance of consept "corporate governance" can be distinguished:

– management, including the sole executive body of the issuer;

– large shareholders (the owners of control package of society voting shares of society);

– shareholders possessing a minor number of shares (minority shareholders);

– state authorities (Ukraine and its entities), as well as local self-government bodies;

– owners of other securities of the issuer;

– lenders who are not owners of the issuer's securities [6].

Corporate form of management due to such advantages as concentration of financial, production, labor, innovation capital, etc., becomes one of the most widespread forms of doing business in developed countries of the world.

There is no unified model of the best corporate governance for all countries, because they have different legal systems, institutional bases and traditions. But common to all countries is that the sign of perfect corporate governance is to prioritize the interests of shareholders, who trust corporations to use their funds reasonably and effectively.

References:

1. Ignatieva I.A. Corporate governance: a textbook / I.A. Ignatieva, O.I. Garafonova. – Kyiv : Educational Literature Center, 2013. – 600 p.

2. Yagmurdzhi A.V. Principles of corporate governance and ensuring the effective functioning of joint stock companies / A. V Yagmurdzhi // Bulletin of the economic science of Ukraine. – 2007. – № 1. – P. 194-197.

3. On approval of the principles of corporate governance [Electronic source] : Decision of the National commission for securities and stock market № 955863-14 of July 22, 2014 // The Verkhovna Rada of Ukraine. – Access mode : https://zakon.rada.gov.ua/rada/show/vr955863-14.

4. Korobka S.V. Corporate governance in Ukraine: problems and ways of their solution /S.V. Korobka // Scientific herald of LNUVMBT. – 2016. – Vol. 18. – № 2. – P. 80-83.

5. Voitsekhovskaya Yu. V. Problems of corporate governance in Ukraine and ways to solve it / Yu. V. Voitsekhovska, V. V. Voitsekhovska. – Lviv : Lviv polytechnic, 2009. – P. 244-247.

6. Corporate structures in the national innovation system of Ukraine / eds. dock. econom. sciences L. I. Fedulova. – Kyiv : UkrINTEI, 2007. – 812 p.



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