Корпоративният сектор в преходната българска икономика
Corporate Sector in the Bulgarian Economy in Transition

Author(s): Vesselin Minchev
Subject(s): National Economy, Business Economy / Management
Published by: Институт за икономически изследвания при Българска академия на науките
Keywords: corporate governance in Bulgaria; joint stock companies; concentration of ownership; insiders;
Summary/Abstract: The presentation of the corporate sector in Bulgaria is based on the broad understanding of the concept of corporate governance, which implies consideration of factors, economic agents and relations beyond the classic relationship between shareholders and management. As а result of the intensive re-distribution of ownership from mass privatization а corporate model has been formed in Bulgaria characterized by high concentration of ownership, merged ownership and management, and finally – а clearly defined insider corporate system. Thus, it is paradoxical that the Commerce Code allows for one-tier governance system, typical for dispersed ownership. In this situation, the latest amendments to the Law on Public Offering of Securities, concerning the appointment of independent external directors, investor relations directors and the adoption of annual programs of corporate governance, brought by the need to harmonize the Bulgarian legislation with that of the European Union, raise concerns if it would be possible at all to effectively apply such measures. There are grounds for debate to what extent the insider system of corporate governance in public companies is related to the decline of their revenues and low capitalization. The shortage of financial resources in the country, including the fact that the stock exchange is not used as а way to collect resources, seriously hinder the continuing restructuring and modernization of the companies and restricts their expansion potential. This sense, it is not surprising that in the recent years the external indebtedness of the private sector reached USD 1.5 billion. This makes up about 13% of the country's GDP and over - of the country's short-term debt. The growth in the private sector's external debt obviously compensates for the resource shortage also due to an underestimation of the attraction of resources at the local stock exchange. This situation entails potential risks to the macro-economic stability of the Bulgarian economy restricted by the currency board.

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