Corporate governance, literature review for Romania.

Fulop, Melinda Timea ; Tiron-Tudor, Adriana

1. INTRODUCTION

The concept of corporate governance is a new one on the national plan. Through this new concept that concerns rules and promulgated principals by the government and professionals with the scope to offer investors an accurate and transparent picture of the financial situations. All at once it wants also the certification of independence of the administrators of an entity and the protection of the administrators. Romania's current problem is the lack of a code of corporate governance. The first code of corporate governance on the existing Romanian market is one proposed and listed on stock exchange in Bucharest.

2. CASE STUDY

2.1 The starting point of the case study

The scandals that have affected the financial word have generated the need for disclosure risks to warn investors about the possible negative developments. Because of this, the supervision organisms and the normalization have emitted requirements that impose the entities to disclose information regarding the risks.

In Romania, since 2008 there is a possible variant of the code of corporate governance that seeks to bring transparency in the financial situation. In the field of corporate governance in the national context there aren't a lot of studies, because the regulations regarding this subject are missing. As we can form an idea of the current situation of corporate governance we have studied the articles published in the filed from 2006 to 2008 of specialist magazines "Audit Financiar", "Contabilitate, Expertiza si Auditul afacerilor", "OECONOMICA", "Theoretical and Applied Economics", "Accounting and Management Information Systems" considering these magazines the most relevant in the economic accounting field. We believe that the journals selected by us are a good choice because in this magazine have a chance to publish both theoreticians and practitioners. The results of our analysis regarding the evolution of publication in the field of corporate governance had the aim of checking assumptions made by us.

H1: Is there a direct link to the publication with the emergence of corporate governance code?

H2: Are the publication in the field of corporate governance strict on Romania?

H3: What are the relevant fields for publication in the corporate governance area?

H4: Are most of the publication published by the teachers?

2.2 Results of the case study

Following collection of all articles in journals listed by years 2006-2008 we undertook analysis using the SPSS 16 program. The analysis on number of years on the post can be seen in Figure 1.

[FIGURE 1 OMITTED]

As you can see 2008 is the year of publication on corporate governance. The main reason may be the appearance of a code of corporate governance in this area.

A number of researches examine the corporate governance at a national plan. We could cite to this effect developed studies of Morariu&Stoian (2006), Dobroteanu (2006), Feleaga(2006), Lazar (2007), Danescu (2007), Costache (2007), Dobre(2007), CANNIZZO (2008), Mihaileanu (2008), Danescu& Spatacean (2008), Rusovici&Popescu (2008), Audas (2008), Bowman (2008), Weaver (2008) si Stanciu&Stoicescu (2009). Following a review of the literature Marston & Shrives (1991) have found that company size, listing on a capital market, leverage, profitability and size of audit firm characteristics have been examined most frequently.

The first hypothesis is confirmed by the 16 papers published in 2008 in the field compared to 2007 when they were published only 3 and in 2006 a total of 6 articles.

By the Law 441/2006 which complements Corporation Law no. 31/1990 in terms of good governance. Currently in Romanian entities isn't proofed the application of the corporate governance. If we look at the public information of entities, we realize that there isn't a particular chapter or enough information about the corporation governance. Although in 2008 there was a Code of Corporate Governance displayed on the official Stock Exchange in Bucharest, very few entities refer to this code or in general codes of corporation governance. Analysis of the 2 hypothesis was designed to see if lightens on the term of corporate governance in Romania or it work on research that already exists on the economic data. For this purpose we have developed a correlation between the years of publication and publication on issues related to corporate governance in Romania or in general. The results of this analysis can be visualized in Table 1.

As we can see there is a growing trend to publish on topics related to Romania and the code of Romanian corporate governance. But because of the lack of data and information required is the publication of articles in general and in particular the theoretical. Background of an empiric studio is difficult to achieve due to lack of data.

To have a clearer image we analyzed also the field in which have published several articles on corporate governance. Here we are limited to the field of accounting, but we divided it and in several categories. Generally most items are historical articles, which tried to describe the evolution of corporate governance, and its appearance. Also a lot of articles written and considered in our sample are bound by the rules and codes of corporate governance. A classification on the field of accounting can be seen in the chart below.

Like I said most of the publications are of general topics of accounting. But we noticed a rather large post on the corporate governance field closely related to the Audit area. One reason for the publication of the audit field may be also control issues that led to the collapse of several large firms in the world such as Enron, WorldCom and others. As we know the collapse has been initiated on the grounds of lack of control of where they occurred and a series of fraud or as told creative accounting.

A good argument for the large number of papers published in the field of development, standards and regulations on corporate governance may be that very few of the articles published are published by practitioners which have a direct contact with issues of corporate governance.

As we can see in the table above, most of the 2006-2008 articles were published by the teachers. Only a percentage of 36% of articles published are written by experts from the field of practice.

3. CONCLUSION

Following our research we found that there are very few publications in the field of corporate governance to bring light on this topic. Thus very few entities are willing to apply the codes of corporate governance because many market catorii don't have full information and knowledge on the implication and role of corporate governance. All time we consider that once the corporate governance of listed entities makes the final performance levels of current economic - financial, but also the investor expectations regarding future opportunities of development. The quality of leadership and how the management of entities can be considered as a non-financial variable that is increasingly important in determining the performance entity. The application of the corporate governance Code can lead to a higher interest to investors, because the application of the corporate governance code it obtains a transparent and faithful image of the entity. From our perspective by applying the corporate governance code by some listed entities, they may attract new investors leading to a better develop of them. Although the idea of implementing a corporate governance code isn't agreed by all entities listed on the stock market, we consider that the application of the code can bring a number of positive influences. As well we propose also the consultation and the regulation and corporate governance codes of EU countries which are already applying to them.

4. REFERENCES

Bowman, B. (2008). Zece lucruri pe care trebuie sa le faca in 2008 comitetele de audit (Ten things that need to make 2008 the audit committees), Audit Financiar, EdituraCAFR, ISSN 1583-5812, Bucuresti

Cannizzo, M. (2008). Guvernanja corporativa si sistemul bancar(Corporate governance and banking), Audit Financiar, Editura CAFR, ISSN 1583-5812, Bucuresti

Danescu, T. & Spatacean, O. (2008). Guvernanta corporativa--de principii aplicabile entitatilor listate pe o piata reglementata de capital(Corporate governance--principles applicable to entities listed on a regulated market capital), Audit Financiar, Editura CAFR, ISSN 1583-5812, Bucuresti

Dobroteanu, C.L. & Dobroteanu, L. (2006). Relatia audit intern --guvernanta corporativa (Relationship internal audit corporate governance), Audit Financiar, Editura CAFR,ISSN 1583-5812, Bucuresti

Dobroteanu, L. et al. (2008). Harmony and diversity across: Audit quality control and corporate governance in France, Great Britain and Romania, Accounting and Management Information Systems, ISSN 1583-4387, pag.420-432, Bucuresti

Dragomir, V.D. (2008). Accounting in the name of global corporarte governance a historical perspective, Accounting and Management Information Systems, ISSN 1583-4387, pag. 16-28, Bucuresti

Feleaga, L. & Feleaga, N.(2008). Guvernanja corporativa in Statele Unite ale Americii: legislatie si reglementare(Corporate governance in the United States: legislation and regulation), Contabilitate, Expertiza si Auditul afacerilor, Editura CECCAR, ISSN 1454-9263, Bucuresti

Feleaga, N. (2008). Geneza, clasicism [section]i contemporaneitate in evoluia guvernan^ei corporative(Genesis, classical and contemporary developments in corporate governance), Contabilitate, Expertiza si Auditul afacerilor, EdituraCECCAR, ISSN 1454-9263, Bucuresti

Lazar, A. (2007). Guvernanja corporativa--obligatie sau optiune?( Corporate governance--obligation or option?), Audit Financiar, Editura CAFR, ISSN 1583-5812, Bucuresti

Manolesc, M. & Roman A.G. (2007). The corporate governance and the process of regulation and implementation, Accounting and Management Information Systems, ISSN 1583-4387, pag. 580-584, Bucuresti

Mihaileanu, L. (2008). Impactul legii Sarbanes-Oxley asupra companiilor romanesti (Impact of Sarbanes-Oxley on Romanian companies), Audit Financiar, Editura CAFR,ISSN 1583-5812, Bucuresti

Tab. 1. Correlation years and publish on topics related to
Romania or general themes

 Publication in Romania

 Romania International Total

year

2006 2 4 6
2007 2 1 3
2008 7 9 16

Total 11 14 25

Tab. 2. Scope of Publication

Field Frequency Percent Valid Cumulative
 Percent Percent

Audit 5 20.0 20.0 20.0
Banking 1 4.0 4.0 24.0
Manageria 3 12.0 12.0 36.0
Others 16 64.0 64.0 100.0

Total 25 100.0 100.0

Tab. 3. Profession of the author of the publication
 Valid Cumulative
 Frequency Percent Percent Percent

Academic environment 16 64.0 64.0 64.0
Practitioners 9 36.0 36.0 100.0

Total 25 100.0 100.0