Stock Market Rationale under Conditions of Defective Corporate Governance – The Case of Macedonia
AbstractThe goal of this paper is to examine the real role of the stock market in an economy with a specific legacy from the transition period. Macedonia emerged as one of the successors of former Yugoslavia and after a period of transition to a market economy, it became evident that the expectations for a fast convergence with the developed economies did not materialize. One of the reasons for this disappointment lies in the defective corporate governance structure that was created through the privatization in which most of the potentially successful companies were bought by their employees and managers. In such a situation, the dominant owners show little interest in disclosing details from their companies to the public, they find different ways to extract benefits from the business for themselves by bypassing the stock market, the efforts of the managers are not reflected in the share prices, etc. In such circumstances, the investors in shares are trying to pick potential “winners” rather than analyze the company fundamentals and the stock exchange resembles a casino to a much greater extent than we are ready to admit.
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