Transparency and Disclosure Regulations—A Valuable Component of Improving Corporate Governance Practice in Transition Economies

Abstract

Using a sample of public joint stock companies in Slovenia, we investigated the transparency and disclosure practices in the under-investigated context of transition economies. We combined the research on transparency and disclosure with the more recent studies on corporate governance from the perspective of the institutional theory. The SEECGAN Index methodology was applied that enables exploration of the quality of transparency and disclosure practice as one of the component of corporate governance. The methodology was applied on company and national levels as well as on international level by comparing the results among participating transition countries (i.e., Croatia and Slovenia). Research results show that the transparency and disclosure practice is of first-class and good quality in more than 80% of Slovenian prime and standard market companies listed on the Ljubljana Stock Exchange. Even though the transparency and disclosure practice is of better quality in Slovenian than in Croatian companies, improvements are required in several areas. The findings of the research indicate that several regulations (i.e., legislation, regulations and recommendations of the government, the Stock Exchange, and the directors’ and managers’ associations) positively affect governance practice in Slovenian public joint stock companies. These findings support the concept of institutional complementarities that provides a useful framework for exploring the interactions among institutions that result in synergetic effects of their activities and influence the effectiveness of the firm-level governance practices. Regular monitoring of transparency and disclosure practices is proposed for enabling companies’, the stock exchange’s and policy makers’ in-depth insight into the quality of such practices and indicating areas where improvements are required.