Online governance disclosure in central and eastern Europe
Sep 09, 2009
Steady improvement through 17 PFS Program surveys
Central and eastern European (CEE) companies continue to move forward in their effort to provide online governance disclosure. According to a new survey by the Partners for Financial Stability (PFS) Program, a regional project co-financed by USAID and EWMI, ‘new thresholds’ have been achieved. This summer’s survey, the most recent of 17 semi-annual regional snapshots, reveals that disclosure of detailed governance information increased in all categories surveyed except one – the local language website category.
While 91 percent of the 10 largest blue chips in 11 countries provide a list of management online, only 68 percent provide any additional biographical information. Still, the first number is an all-time high and the latter has climbed seven points since last February. Similarly, while 89 percent of companies surveyed provide a list of board directors online and only 64 percent offer anything else, that’s a comfortable jump from 52 percent offering more information in February 2008.
‘We’re definitely satisfied with the trend,’ says Igor Solodovnik, Warsaw-based research assistant at the PFS Program. ‘In terms of trends toward providing more information about directors, CEE countries are actually doing better than their Brazil, Russia, India and China (BRIC) peers, which are generally much larger companies.’
For the seventh time, the survey also analyzes companies in BRIC countries as well as Ukraine to see how CEE countries compare. While BRIC companies generally outperform CEE peers (the largest gaps being additional information on management and directors), the most transparent of the largest listed companies in CEE slightly outperform their BRIC peers.
As for the dip in the local language website category, Solodovnik explains: ‘Philip Morris and a few other Czech companies do not have a local language website but I don’t think it’s a regional tendency.’ (In seven of 11 countries, each of the 10 largest countries has an English-language website).
‘We’re doing these studies partly to show that best practices actually help companies that invest a little bit of their resources in things like disclosure,’ says Solodovnik, who admits more work needs to be done before best practices are widely achieved. On August 17, 2009, 64 of the 110 companies surveyed in CEE disclosed information in all the categories analyzed in the basic PFS Program survey, namely local and English-language websites along with a list of, and information about, management and board members.
That means 42 percent remain holdouts on reasonably bread and butter stuff. Why the reticence?
‘It’s hard to pinpoint a single reason,’ says Solodovnik. ‘Clearly our ongoing surveys indicate the impact of corporate governance codes on disclosure of governance data. Also, in some countries, such as Poland, there is an active investor relations society. Many companies have good investor relations programs - but in other companies there is a lot of work for IR professionals to do.’
The survey looked at corporate websites in Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. The results are available online at the PFS Program website at www.pfsprogram.org.
By Jeff Cossette