International Journal of Management Cases Special Issue Corporate governance in Southeast Europe: in search for transparency and efficency Guest editors Darko Tipuric and Veljko Trivun Volume 14 Issue 3 EDITORS Professor Darko Tipuric Graduate School of Economics, University of Zagreb Western Europe [email protected] Professor Barry J. Davies Professor of Marketing, University of Gloucestershire, UK Professor Yan Xu [email protected]. Shanxi University of Finance and Economics [email protected] The Rest of the World Professor Claudio Vignali ASSOCIATE EDITORS Arnold Ziff Chair in Retailing, Leeds Metropolitan University, UK [email protected] Gianpaolo Vignali Manchester Metropolitan University, UK [email protected] EDITORIAL BOARD Dr. Leo Dana Dr. Mirko Palic University of Canterbury, New Zealand Graduate School of Economics, University of Zagreb [email protected] [email protected] Professor Alberto Mattiacci Professor of Retailing and Marketing,The University of Sienna, Italy mattiaccialbunisi.it www.ijmc.org Dr. Hans-Rüdiger Kaufmann University of Nicosia, Cyprus [email protected] www.circleinternational.co.uk Professor Dr. Jürgen Polke Virtual University of Munich, Germany [email protected] ISSN 1741-6264 Professor Carlo A. Pratesi Professor of Retailing Marketing, University of Urbino, Italy International Journal of Management Cases is published by: [email protected] Professor Brenda Sternquist Access Press UK, Professor, International Retail Management, Michigan State 1 Hillside Gardens , University, USA [email protected] Darwen, Dr. Tomasz Wisniewski Lancashire, The University of Szczecin Poland BB3 2NJ [email protected] UK Professor Irena Neganova Ural Sate University, Russia [email protected] Dr Ulrich Scholz Fontys Fachhochschule, Nederlands [email protected] Professor Sanda Renko Graduate School of Economics Zagreb, Croatia [email protected] Professor Lutz Sommer University of Albt, Germany [email protected] Dr. Jantima Banjongprasert Silpakon University, Thailand [email protected] Professor Vitor Ambrosio University of Estoril, Portugal [email protected] Professor Bernd Britzelmaier Pforzeim University, Germany [email protected] Professor Nirmaalya B Biswas Bangalore Management Academy, India [email protected] Professor Ihn Hee Chung Kumoh Institute of Technology, South Korea [email protected] Professor Gianpaolo Basile University of Salerno, Italia [email protected] Professor Carmen Rodriguez Santos Universidad de Leon, Espania [email protected] Professor Dr. Iur. Rainer Schackmar University of Applied Sciences, Schmalkalden, Germany [email protected] Dr. Razaq Raj Leeds Metropolitan University, UK [email protected] Copyright © Access Press UK International Journal of Management Cases iii International Journal of Management Cases Contents TOP MANAGEMENT CHANGES AND stakeholder orientation – CASE OF Croatia 4 Darko Tipurić, Marina Lovrinčević & Marina Mešin Related PARTY TRANSACTIONS AND PROTECTION OF MINORITY SHAREHOLDERS 15 veLjko Trivun, veDaD SiLajDžić, FaTiMa MahMuTćehajić & Mia MrguD INSTITUTIONAL DETERMINANTS OF corporate GOVERNANCE AND METHODOLOGICAL DISCONTINUITY OF corporate PERFORMANCE MEASUREMENT IN MONTENEGRO 23 MIRJANA KULJAK CROSS-BORDER MERGERS AND ACQUISITIONS IN SOUTHEAST EUROPE: CASES FROM Croatia, ROMANIA AND Bulgaria 32 Davor FiLipović, najLa poDrug & jaSna preSTer Corporate GOVERNANCE IN SLOVENIA: DISCLOSURE AND transparency OF PUBLIC companies 41 DaniLa Djokić Evaluating BOARDS IN LARGE Companies IN Macedonia 49 BoBek šukLev & Maja šukLeva Corporate GOVERNANCE PRACTICES IN FRAUD PREVENTION AND DETECTION - EMPIRICAL EVIDENCE FROM Croatia 59 BoriS Tušek & ana kLikovac INTERNET BASED overview OF corporate SOCIAL RESPONSIBLE PRACTICE IN FOUR COUNTRIES IN SOUTHEAST EUROPE 72 MiSLav anTe oMazić & kSenija Banovac SOME relevant corporate GOVERNANCE ISSUES IN croatia AND BOSNIA AND Herzegovina 81 Darko Tipurić, veLjko Trivun, DoMagoj hruška, veDaD SiLajDžić, FaTiMa MahMuTćehajić, Marina Mešin & Mia MrguD DEVELOPMENT OF Corporate GOVERNANCE IN SOUTH EAST EUROPE - CASE OF Croatia 90 anTe rončević, ivana BuLog, & gianpaoLo vignaLi Corporate GOVERNANCE CHALLENGES IN Municipally OWNED Company - CASE OF Croatia 99 Marijan cinguLa, DoMagoj hruška & Dina ToMšić FIRM-LEVEL factors INFLUENCING DIVIDEND POLICY – CROSS country analysis 107 anTonija kožuL & SiLvije orSag THE USE OF CONJOINT Analysis IN INCREASING INVESTMENTS LOANS WITH COMERCIAL BANKS - CASE OF BOSNIA AND Herzegovina 115 Darko MiLunović 1 International Journal of Management Cases INTERDEPENDANCE OF CONTROLLING AND Corporate GOVERNANCE IN TRANSITION COUNTRIES 128 TihoMir Luković MANAGERIAL CONTRACTS– SOLUTION(S) IN BOSNIA AND Herzegovina 138 aziz šunje & eMir kurTić 2 International Journal of Management Cases years, burdened with myriads of different post- Editorial socialist problems and slow adaptation to the modern economic system. In almost all countries One of the most important challenges in raising of the region, rapid privatization - often carried out competitiveness and creating a new, better under suspicious circumstances - led to a range society in the 21st century is the promotion and of long-term problems from which a significant development of good corporate governance number was related to corporate governance practices at the global level. Good corporate issues. Substantial efforts are required to improve governance depends on the balance of relations corporate governance practices and even though between internal and external mechanisms which noticeable improvements are seen in recent years, ensure the efficiency of governing and help in there is still much work ahead. the resolution of natural problems, as well as the This special issue of International Journal of possible conflicts that may occur within a corporate Management Cases, titled “Corporate Governance structure. in Southeast Europe: In search for Transparency Historical, cultural, political and economic realities and Efficiency”, portrays some of the challenges, play a crucial role in modelling system of corporate problems and corporate governance issues faced governance. A closed system of corporate by companies in this region. The authors of the governance, characteristic of Continental Europe, is articles presented their research conducted in defined by a myriad of legal, cultural and institutional Bosnia and Herzegovina, Montenegro, Macedonia, relations, through which the influence of individual Slovenia, Serbia, Romania, Bulgaria and Croatia. stakeholders on setting goals and supervising We were calling on them to present their research the firm’s business policy are determined and is and insights. based on the activities of blockholders and banks. The focus of the papers is devoted to interesting Good corporate governance is based on adequate questions such as: institutional determinants combinations of the legal protection of investors of corporate governance and methodological and the level of ownership concentration. discontinuity of corporate performance South East Europe is one of the regions we should measurement, corporate governance effectiveness, look at more closely. It is a region full of surprises; disclosure and transparency of public companies, conflicts and wars in past, on the one side, but protection of minority shareholders, fraud huge growth potential on the other side. The prevention and detection, relation between history of SEE countries, their characteristics, their top management turnover and stakeholder resources, their cultural roots and their political orientation, cross-border mergers and acquisitions structures shape their paths. Most of SEE countries in the region, social responsibility practices in have attained political stability, modest but steadily companies, interdependence of controlling and growing prosperity and orderly economic activity. corporate governance etc. In other words, in SEE countries we find aspiring We hope that this special issue is interesting economics with increasingly stable conditions and and inspiring for all those engaged in the areas rapidly growing opportunities for business. South of corporate governance and management in East Europe has excellent chances of continuing transition countries. the strong growth path it kicked off at the start of the millennium. But key sectors, economic system and other infrastructure still need to be developed to tap this potential. SEE countries, as an integral part of continental professor Darko Tipurić, ph.D. Europe, have a closed system of corporate governance, but with a number of special Professor Veljko Trivun, Ph.D. features. They have been passing through a difficult transitional period in the past twenty Editors 3 International Journal of Management Cases TOP MANAGEMENT CHANGES AND stakeholder orientation: CASE OF Croatia Darko Tipurić FacultY OF ECONOMICS AND BUSINESS, UNIVERSITY OF ZAGREB, ZAGREB, Croatia Marina Lovrinčević. FacultY OF ECONOMICS, UNIVERSITY OF SPLIT, SPLIT, Croatia Marina Mešin FacultY OF ECONOMICS AND BUSINESS, UNIVERSITY OF ZAGREB, ZAGREB, Croatia Abstract The results of this research indicate that there are differences in stakeholder orientation regarding Stakeholder theory of the corporation was top management changes, and the observed developed as an alternative to the prevalent differences are even larger when the change was system of corporate governance with shareholders forced. The results of this research also suggest being the only group managers are