TRANSPARENCY OF FINANCIAL REPORTING AS INTERNAL MECHANISM OF CORPORATE GOVERNANCE IN BANKS IN B&H

Igor Zivko (), Zdenko Klepic () and Nikola Papac ()
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Igor Zivko: Faculty of Economics, University of Mostar
Zdenko Klepic: Faculty of Economics, University of Mostar
Nikola Papac: Faculty of Economics, University of Mostar

Interdisciplinary Management Research, 2010, vol. 6, 350-361

Abstract: Corporate governance is a group of relations between owners, stockholders and other groups of interest or influence. Actually it is a group of relations between different participants of the corporation business who work on determining then direction and successfulness of the corporation. Corporate governance is shown through several different mechanisms that enable the management to govern the corporation for the welfare of one or more interested parties. The management is represented as the agent that runs the corporation for the welfare of different principals. Adequate and transparent reporting is one of the most significant internal mechanisms of corporate governance and is very important for the existing and future investors on the market of capital because it is a picture of behavior and work of the management of the corporation. Through the presentation of previously made financial statements the banks provide information about themselves and their business running to investors, creditors, analysts and other interested parties, i.e. they make their business running transparent. Transparency in financial reporting means insuring the simplicity and easiness of access to information, their accuracy, quality, timing, presentation in clear and simple terms, and all that provides control over debtors and owners discipline, market evaluation of the bank, control of risks, responsibility of managers and bank directors. The goal of this work is to analyze the use of Internet with the purpose of financial statements and improvement of transparency of financial statements of banks in Bosnia and Herzegovina. Transparency in banking industry is the crucial element of supervising process and efficient market discipline, but it is also one of crucial internal mechanisms of corporate governance. Special attentions will bi given to congruency of presented information and the directions of third column of Basel II. with the purpose of ensuring market discipline and EU Directive of Transparency.

Keywords: corporate governance; transparency; internal mechanisms of corporate governance; financial statements; Basel II; EU Directive of Transparency (search for similar items in EconPapers)
JEL-codes: G21 M4 (search for similar items in EconPapers)
Date: 2010
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