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Codes of Good Governance in Hungary

Author

Listed:
  • Zsolt Bedo

    () (University of Pecs)

  • Eva Ozsvald

    () (Institute of Economics, Hungarian Academy of Sciences)

Abstract

The purpose of the paper is to account for the short history of the soft law regulation of corporate conduct on the Budapest Stock Exchange (BSE). In theory, voluntary codes of good governance are expected to improve the deficiences of the existing mechanisms of corporate governance. In case of the Hungarian public companies the most important corporate governance problems are those related to the fragile safeguards of the interests of minority shareholders and to the lack of incentives for a much higher degree of transparency and disclosure. It is these two sets of issues on which the present analysis concentrates. The empirical core of the paper assesses the quality of information to be gained from the corporate governance reports of listed companies on the BSE. In order to discover links between the quality of information and firm characteristics we categorized the declarations based on their adequacy and applied binary regression analysis. We found inverse relationship between ownership concentration and the quality of information, while the higher liquidity of shares enhanced the adequacy of declarations.

Suggested Citation

  • Zsolt Bedo & Eva Ozsvald, 2008. "Codes of Good Governance in Hungary," IEHAS Discussion Papers 0818, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  • Handle: RePEc:has:discpr:0818
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    References listed on IDEAS

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    1. Barclay, Michael J. & Holderness, Clifford G., 1989. "Private benefits from control of public corporations," Journal of Financial Economics, Elsevier, vol. 25(2), pages 371-395, December.
    2. Katharina Pistor & Martin Raiser & Stanislaw Gelfer, 2000. "Law and Finance in Transition Economies," The Economics of Transition, The European Bank for Reconstruction and Development, pages 325-368.
    3. John S. Earle & Csaba Kucsera & Álmos Telegdy, 2005. "Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: do too many cooks spoil the goulash?," Corporate Governance: An International Review, Wiley Blackwell, pages 254-264.
    4. John S. Earle & Csaba Kucsera & Álmos Telegdy, 2005. "Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: do too many cooks spoil the goulash?," Corporate Governance: An International Review, Wiley Blackwell, pages 254-264.
    5. Jeffrey Zwiebel, 1995. "Block Investment and Partial Benefits of Corporate Control," Review of Economic Studies, Oxford University Press, vol. 62(2), pages 161-185.
    6. Heflin, Frank & Shaw, Kenneth W., 2000. "Blockholder Ownership and Market Liquidity," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 35(04), pages 621-633, December.
    7. Niels Hermes & Theo J.B.M. Postma & Orestis Zivkov, 2007. "Corporate governance codes and their contents - An analysis of Eastern European codes," Journal of East European Management Studies, Rainer Hampp Verlag, vol. 12(1), pages 53-74.
    8. Mike Burkart & Denis Gromb & Fausto Panunzi, 1997. "Large Shareholders, Monitoring, and the Value of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 693-728.
    9. Philippe Robert-Demontrond & R. Ringoot, 2004. "Introduction," Post-Print halshs-00081823, HAL.
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    More about this item

    Keywords

    Corporate governance; company law; voluntary codes of governance;

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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