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Content of the presentation. 1. The current status of corporate governance in Bulgaria and the other countries that made up the former Eastern Block (South East and East Europe) 2. To what extent do investors in emerging markets pay attention to corporate governance? 3. The specific role of med
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1. The role of media in building good corporate governance Chavdar Parvanov
Dnevnik business daily, part of the leading business media group in Bulgaria
Washington DC, July 2th 2008
2. Content of the presentation 1. The current status of corporate governance in Bulgaria and the other countries that made up the former Eastern Block (South East and East Europe)
2. To what extent do investors in emerging markets pay attention to corporate governance?
3. The specific role of media in building better corporate governance
4. Tricks and tactics for making companies more transparent and disclose ad hoc information
3. Current status The legal and regulatory framework has improved dramatically, CG codes were adopted
Very concentrated ownership (average below 25% for the leading Bulgarian companies)?
Low seperation of ownership and control
Opaque ownership structures
Inexperienced and often inadequate corporate bodies
Poor mark to the state and municipalities as shareholders
4. Bulgaria in detail Importance of equity markets - increasing
Harmonization with the EU legal framework on capital markets and adoption of a National Corporate Governance Code
However there is still a considerable way to go
5. Bulgaria in detail Over 40% of the companies are trying to hide financial information
One-third do not present their business goals
Just 11% of all public companies have adopted the NCGC
No corporate social responsibility (less than 1% have signed UN Global Agreement
6. To what extent do investors in emerging markets pay attention to corporate governance? A crucial indicator a non-efficient and underperforming judicial system
Foreign investors pay premium for better corporate governance
Good governance practices are even more important than financial statements
7. The role of media Crucial role (a new legal framework and poor courts)
Watchdog that not only barks but also bites
An early source for uncovering accounting malfeasance and bringing the wrongdoing to light
In about 29% of the market abuses, the press is way out there before the securities commission
When the press is the first source, there's a huge market response and the opposite
8. Tricks and tactics Make rankings they are always prefered by the readers and they impact the reputation of companies (the 10th copmanies with the best corporate governance model, the most and least admired companies)
Use the term corporate governance more often in articles the more, the better
Introduce the corporate governance issues in a user-friendly way to the readers (through personal finance supplements, rankings...)
Control the stock exchanges and the regulator
9. Tricks and tactics Find whistleblowers in the companies problem with the legislative system
Make foreign investors, analysts, portfolio managers and active individual players your partners and contributors
Do not let board of directors use corporate governance as a public relations exercise
Check companies that make IPOs and SPOs
Put top priority to the new media websites, online journalism
Check the user-generated content - forums and blogs