Annals of the University of Oradea: Economic Science (Jul 2019)
THE INFLUENCE OF CORPORATE GOVERNANCE ON ATTRACTING FOREING DIRECT INVESTMENTS (FDI) – IN ROMANIA
Abstract
Within an economic entity, regardless of its organizational form, public or private, different interests are manifested between managers and other stakeholders. Corporate governance deals with the way in which these interests can be harmonized to make work more efficient by using equitable distribution of rights and responsibilities between all stakeholders. All corporate governance requires trust-based relationships between all structures and various stakeholders. In the context of globalization and internationalization of economies, in order to effectively attract the financial and intellectual capital needed for the sustainability of a business, corporate governance mechanisms must be based on gaining the trust of all stakeholders. A healthy business environment focuses on providing information in a transparent and faithful way, and in the business environment the existence of good corporate governance is significant as importance in improving the capacity of an organization to create value. These goals require a climate based on accountability, fairness, transparency and efficiency, where ethical principles should govern behaviours spread throughout the entity. Starting from these goals, the empirical research aims to identify the effects generated by corporate governance in terms of the evolution of foreign direct investments in Romania. These goals requires the existence of entities in which management and control processes are adequate, giving them a high level of transparency and credibility in dealing with capital owners, investors and other stakeholders. The research has reconfirmed that the proper governance of an entity can only be achieved by knowing and applying corporate governance principles, rules and practices with responsibility. According to corporate governance theories, if they are well-known, understood and applied, they can increase the credibility of entities, better and faster access to capital markets, capital costs reduction, efficient use of resources, sustainable business development, and, also, a healthy economic environment. In order to achieve the public interest, new challenges and trends, it is important for management and control systems to reconfigure the objectives in which the achievement of global performance has implications for social responsibility and environmental protection.
