THE LEVEL OF CORPORATE GOVERNANCE IN BOSNIA AND HERZEGOVINA
A developed system of corporate governance is a fundamental prerequisite for sustainable economic growth, increase in economic system efficiency and a guarantee for easier access to foreign sources of capital. The specificity of Bosnia and Herzegovina is that it has two separate legal corporate governance systems, which is a consequence of the entity-based structure of the state, and both entities have characteristics of a closed corporate governance system. Corporate governance quality level is defined as the degree of compliance with set corporate governance standards defined at the international and national institutional levels. Guided by previous theoretical and empirical findings, Bosnia and Herzegovina has characteristics of a closed corporate governance system in both entities. Corporate governance in Bosnia and Herzegovina is measured by the level of corporate governance (abbreviated LCG) index, which is created from six categories containing 46 criteria by which corporate governance is analyzed and assessed. Its value can range from 0 to 100%. The measurement of corporate governance provides a clear picture of strengths and weaknesses of the corporate governance system in corporations in Bosnia and Herzegovina and is the foundation of long-term sustainable and socially responsible growth and development of the entire economic system in Bosnia and Herzegovina.
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