The Strange Kind Of Corporate Governance

Erić, Dejan (2007) The Strange Kind Of Corporate Governance. Economic analysis, 40 (3-4). pp. 41-57. ISSN 0013-3213

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Abstract

The paper refers to the development of corporate governance phenomenon in the Federal Republic of Yugoslavia (FRY) during the 1990s of the twentieth century. It is about the country established by disintegration of the former socialist Yugoslavia, which was in the immediate war zone, under the United Nationsʹ sanctions a full eight years and had one of the most undemocratic regimes in the world. In those circumstances, under the influence of factors from external environment, but also in a situation of unfinished privatization and transition processes and almost complete centralization of entire social and economic life, the specific forms of corporate governance developed, that did not bear much resemblance to the practice in other countries. Many ex‐socialist countries of the Central and Eastern Europe which at that time were in the initial phases of transition also faced certain ʺchildhood illnessesʺ characteristic of the corporate governance development. That was a logical consequence of the long‐standing existence of socialist systems, absence of private ownership, the real corporations and market economy institutions. Meanwhile, however, it became possible to find adequate solutions too many problems and deviations. In Yugoslaviaʹs case, the opposite trends and one strange kind of corporate governance have appeared, due to the rise of unusual forms of corporations, uncharacteristic ownership, and specific mechanisms of control and governance. In that situation, ʺchildhood illnessesʺ were not adequately cured, but soon began to take on some degenerative forms. Since eventually the necessary political changes were effected in Yugoslavia in 2000, the bases for radical departures from the past and correction of many mistakes and misconceptions were formed. One of them has certainly referred to the departure from the strange kind of corporate governance.

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