69 10 3494 https://omeka.ibu.edu.ba/files/original/49be3b62bbeb998ad808e92b64a6cbb9.pdf 142d9ff4f09b6aa84772c23e2f17da92 PDF Text Text 1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo Corporate Governance and Sustainable Development, A Comparative Analysis on Turkey and Bosnia Herzegovina Mete KARAYEL Res. Assist. , Afyon Kocatepe University, Faculty of Economics and Administrative Sciences, mkarayel@aku.edu.tr Assist. Prof. Dr. Halil SAYLI Afyon Kocatepe University, Faculty of Economics and Administrative Sciences, hsayli@aku.edu.tr Assist. Prof. Dr.Alparslan Şahin GÖRMÜŞ Uşak University, Faculty of Economics and Administrative Sciences, alparslansahin.gormus@usak.edu.tr Abstract: Corporate governance is the system by which business corporations are directed and controlled. This concept is getting more attention in the recent years after many corporation scandals and financial crises. But it has many benefits to companies and countries. When we look at the country side, according to literature, there are several channels through which corporate governance affects growth and development in countries, these channels are: increased access to external financing by firms, a lowering of the cost of capital and associated higher firm valuation, better operational performance through better allocation of resources and better management, reduced risk of financial crises, and better relationships with all stakeholders. In this study we aim to show importance of corporate governance on sustainable development in developing countries. In this direction we will use data acquired from reports and data prepared by World Bank, OECD (Organization for Economic Co-operation and Development) and governmental organizations in these countries. Corporate governance levels and performances of companies and countries and effects of these on growth and sustainable development will be acquired from data. At the conclusion part, we will conclude our study with a comparative country analysis on Turkey and Bosnia Herzegovina and with some suggestions to countries and future researches. Key Words: Corporate Governance, Sustainable Development, Growth. 1. Definition of Corporate Governance There are many different definitions of corporate governance. But in literature we can mention the definition of some academicians and organizations. The term “corporate governance” was firstly used in a report prepared by Sir Adrian Cadbury. In this report; Corporate governance was defined as the system by which companies are directed and controlled. In this definition board of directors has a key role. Boards of directors are responsible for the corporate governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place. The responsibilities of the board include setting the company’s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship. The board’s actions are subject to laws, regulations and the shareholders in general meeting (Cadbury 1992). From the perspective of World Bank, corporate governance refers to the structures and processes for the direction and control of companies. Corporate governance concerns the relationships among the management, Board of Directors, controlling shareholders, minority shareholders and other stakeholders. In addition to this definition, it can be said that good corporate governance contributes to sustainable economic development by enhancing the performance of companies and increasing their access to outside capital. (Worldbank) Monks and Minow (2007) defined corporate governance as the structure that is intended to make sure that the right questions get asked and that checks and balances are in place to make sure that the answers reflect what is best fort he creation of long-term, sustainable value. When the structure gets subverted, it becomes too easy to succumb to the temptation to engage in self-dealing (Monks & Minow 2007). 74 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo Deakin (2005) defined corporate governance as a concept concerning in essence, with issues of ownership and control of the enterprise. ‘Ownership’ refers in this context to the legal allocation of property rights among the principal stakeholders or corporate constituencies (shareholders, creditors and employees), and ‘control’ to the way in which legal rules and social norms interact to determine the balance of power among these groups (Deakin et al. 2005). According to Ulgen &Mirze (2004) corporate governance contains relationship between board of directors, which is assigned and responsible for strategic management and direction of the corporation, and shareholders, employees, suppliers, customers and other society corporations, which has a stake and interest in corporation’s business results. Several studies have been made in the area of corporate governance. These studies emphasize the fact that no single corporate governance model is valid for every country. However, the concepts of equality, transparency, accountability and responsibility appear to be main concepts in all international corporate governance approaches that are widely accepted (CMBT 2003). Equality means the equal treatment of share and stakeholders by the management in all activities of the company and thus aims to prevent all possible conflicts of interest. Transparency, on the other hand, aims to disclose company related financial and non-financial information to the public in a timely, accurate, complete, clear, construable manner and easy to reach at low cost, excluding the trade secrets and undisclosed information. Accountability means the obligation of the board of directors to account to the company as a corporate body and to the shareholders. Finally, responsibility defines the conformity of all operations carried out on behalf of the company with the legislation, articles of association and in-house regulations together with the audit thereof (CMBT 2003). 2. Corporate Governance Systems The term corporate governance has been used in many different ways and the boundaries of the subject vary widely. In the economics debate concerning the impact of corporate governance on performance, there are basically two different models of the corporation, the shareholder model and the stakeholder model. In its narrowest sense (shareholder model), corporate governance often describes the formal system of accountability of senior management to shareholders. In its widest sense (stakeholder model), corporate governance can be used to describe the network of formal and informal relations involving the corporation. More recently, the stakeholder approach emphasises contributions by stakeholders that can contribute to the long term performance of the firm and shareholder value, and the shareholder approach also recognises that business ethics and stakeholder relations can also have an impact on the reputation and long term success of the corporation. Therefore, the difference between these two models is not as stark as it first seems, and it is instead a question of emphasis (Maher & Andersson 1999). There are two polar systems of corporate governance: the market-based system(Shareholder Model) and the realtionshipbased or blockholderbased system. The former prevails in the UK, USA, and the Commonwealth countries, and relies on legal rules largely resulting from case law and on the effective legal enforcement of shareholder rights. The blockholder-based system of Continental Europe relies on codified law and emphasizes rules protecting stakeholders such as creditors and employees. The two systems differ not only in terms of the rationale behind their legal rules, but also in terms of their ownership and control. Most Continental European companies are characterized by majority or near-majority stakes held by one or few investors. In contrast, the Anglo-American system is characterized by dispersed equity. Increasing economic globalization has fuelled the debate on the best corporate governance system and the barriers to the development of a single system of corporate governance (Goergen 2005). 2.1. Market Based(Shareholder Model) Corporate Governance System According to the shareholder model the objective of the firm is to maximise shareholder wealth through allocative, productive and dynamic efficiency i.e. the objective of the firm is to maximise profits. The criteria by which performance is judged in this model can simply be taken as the market value (i.e. shareholder value) of the firm. Therefore, managers and directors have an implicit obligation to ensure that firms are run in the interests of shareholders. The underlying problem of corporate governance in this model stems from the principal-agent relationship arising from the separation of beneficial ownership and executive decision-making. It is this separation that causes the firm’s behaviour to diverge from the profitmaximising ideal. This happens because the interests and objectives of the principal (the investors) and the agent (the managers) differ when there is a separation of ownership and control. Since the managers are not the owners of the firm they do not bear the full costs, or reap the full benefits, of their actions (Maher & Andersson 1999). Therefore, although investors are interested in maximising shareholder value, managers may have other objectives such as maximising their salaries, growth in market share, or an attachment to particular 75 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo investment projects, etc. An effective corporate governance framework can minimise the agency costs and holdup problems associated with the separation of ownership and control. There are broadly three types of mechanisms that can be used to align the interests and objectives of managers with those of shareholders and overcome problems of management entrenchment and monitoring (Maher & Andersson 1999): − One method attempts to induce managers to carry out efficient management by directly aligning managers interests with those of shareholders e.g. executive compensation plans, stock options, direct monitoring by boards, etc. − Another method involves the strengthening of shareholder’s rights so shareholders have both a greater incentive and ability to monitor management. This approach enhances the rights of investors through legal protection from expropriation by managers e.g. protection and enforcement of shareholder rights, prohibitions against insider-dealing, etc. − Another method is to use indirect means of corporate control such as that provided by capital. 2.2. Relationship Based (Stakeholder Model) Corporate Governance System The stakeholder model takes a broader view of the firm. According to the traditional stakeholder model, the corporation is responsible to a wider constituency of stakeholders other than shareholders. Other stakeholders may include contractual partners such as employees, suppliers, customers, creditors, and social constituents such as members of the community in which the firm is located, environmental interests, local and national governments, and society at large. This view holds that corporations should be “socially responsible” institutions, managed in the public interest. According to this model performance is judged by a wider constituency interested in employment, market share, and growth in trading relations with suppliers and purchasers, as well as financial performance (Maher & Andersson 1999). However, we should keep in mind that the effectiveness and form of different corporate governance systems may be influenced by a number of factors, including product market competition, the structure of capital and labour markets, and the regulatory and legal environments (Maher & Andersson 1999). 3. Why Is Corporate Governance Important For Emerging Markets? For emerging market countries, improving corporate governance can serve a number of important public policy objectives. Good corporate governance reduces emerging market vulnerability to financial crises, reinforces property rights, reduces transaction costs and the cost of capital, and leads to capital market development. Weak corporate governance frameworks reduce investor confidence, and can discourage outside investment. Also, as pension funds continue to invest more in equity markets, good corporate governance is crucial for preserving retirement savings. Over the past several years, the importance of corporate governance has been highlighted by an increasing body of academic research. Studies have shown that good corporate governance practices have led to significant increases in economic value added of firms, higher productivity, and lower risk of systemic financial failures for countries (World Bank). 4. Corporate Governance, Growth, Development and Sustainable Development McGee & Preobragenskaya (2004) mentioned the importance of corporate governance in transition economies. They showed the importance in by using these sentences in their paper: “Corporate governance has become an important topic in transition economies in recent years. Directors, owners and corporate managers have started to realize that there are benefits that can accrue from having a good corporate governance structure. Good corporate governance helps to increase share price and makes it easier to obtain capital. International investors are hesitant to lend oney or buy shares in a corporation that does not subscribe to good corporate governance principles. Transparency, independent directors and a separate audit committee are especially important. Some international investors will not seriously consider investing in a company that does not have these things” When we review the literature, we can say that there are several channels through which corporate governance affects growth and development (Claessens 2003): • The first is the increased access to external financing by firms. This in turn can lead to larger investment, higher growth, and greater employment creation. • The second channel is a lowering of the cost of capital and associated higher firm valuation. This makes more investments attractive to investors, also leading to growth and more employment. • The third channel is better operational performance through better allocation of resources and better management. This creates wealth more generally. • Fourth, good corporate governance can be associated with a reduced risk of financial crises. This is particularly important, as financial crises can have large economic and social costs. • Fifth, good corporate governance can mean generally better relationships with all stakeholders. This helps improve social and labor relationships and aspects such as environmental protection. 76 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo When we arrive the relationship between corporate governance and sustainable development, we can see it firstly by looking at the definition of sustainable development. The term sustainable development (SD) was used for the first time at the United Nations Conference on the Human Environment in Stockholm in 1972. However, a working definition of SD was coined in 1987 with the publication of ‘Our Common Future’, popularly known as the “Brundtland Report”of the World Commission on Environment and Development. The Commission’s definition, since widely adopted, was: “Development as the means to satisfy the needs of present generations without compromising the resources of future generations”. Sustainability, the Commission argued, includes not only economic and social development, but also a commitment to the needs of the poor and recognizing the physical limitations of the earth (Khalkho 2007). Corporate governance has different effects on sustainable development. By satisfying different needs of stakeholders, by using earth’s resources effectively, and for long-term profit by behaving in a socially responsible way, corporations are having very positive effects on sustainable development. So after we saw the importance of corporate governance, now we can see the corporate governance qualifications and applications from the countries; Turkey and Bosnia & Herzegovina. 5. Corporate Governance Applications in Turkey and Bosnia&Herzegovina 5.1. Corporate Governance in Turkey Corporate Governance is a new and very important concept for Turkish economy. Many governmental organizations, civil society organizations, dernekler and businessmen associations are working on this concept to increase the efficiency and effectiveness of different sectors and to increase development level of Turkey. Now we can see Turkish corporate governance development step by step. - Turkish Industrialists’ and Businessmen’s Association published first report on Corporate Governance in 2002. - In July 2003 the CMB issued corporate governance principles with the aim of enhancing the corporate governance regulations in Turkish listed companies. By recognizing the fact that no single model is valid for every country, the CMB examined the regulations of many countries and generally accepted and recommended corporate governance principles, primarily the OECD Principles of 1999 and revision drafts have been taken into consideration during the preparation of these principles. Corporate Governance Principles of the CMB were revised in 2005 to become compatible with revised OECD principles. The corporate governance principles issued by the CMB (CMB Principles) were developed on the basis of ‘‘comply or explain’’ approach meaning that the implementation of the CMB Principles is optional. - Capital Market Boards of Turkey published Turkish Corporate Governance Code in 2003 by modelling the Corporate Governance Principles in 1999 and it revised the code in 2005. - ISE Corporate Governance Index has been started to be computed on August 31, 2007. Index is composed to measure the price and return performances of the companies traded on the ISE markets (excluding the Watch List Companies Market) having corporate governance rating grades determined according to the "Corporate Governance Principles" issued by the Capital Markets Board. Corporate governance rating grade implies the rating grade that shows compliance with corporate governance principles as a whole and should be given by the rating agencies which are in the rating agencies list of Capital Markets Board. In order to be eligible for corporate governance index, corporate governance rating grade of a company should be granted upon the request of that company and revised or confirmed annually by the rating agency. - Nowadays, new regulations are being made by policymakers in trade law to making use of corporate governance more effectively. 5.2. Corporate Governance in Bosnia and Herzegovina We can see the corporate governance qualifications and applications by analyzing the report “Corporate Governance Country Assessment, Bosnia and Herzegovina” prepared by World Bank in 2006. This report assesses Bosnia and Herzegovina’s (BiH) corporate governance policy framework and enforcement and compliance practices. It highlights recent improvements in corporate governance regulations, makes policy recommendations, and provides investors with a benchmark against which to measure corporate governance in BiH. Since the 1995 Dayton Agreement, BiH’s two entities, the Federation of Bosnia and Herzegovina (FBiH) and the Republic Srpska (RS), have each put in place the basic legal and institutional framework for functioning capital markets. Privatization has created hundreds of companies available for trading on two stock exchanges. Recent reform includes laws to improve the governance of state-owned companies, the creation of a new state commission for accounting and auditing, the development of a common electronic platform for local 77 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo business registers, the drafting of new securities laws and laws on investment funds, and the recent decision in each entity to publicly disclose the top ten owners of each publicly traded company. However, challenges remain. The two regimes have a number of basic weaknesses: investors have insufficient redress; key information for many companies is not available or is of poor quality, the duties of board members are unclear, and their liabilities limited. The securities commissions in each entity have limited authority and resources to oversee the large number of issuers. There is no corporate governance code and awareness of corporate governance is limited. There are also significant differences between the corporate governance regimes of each entity, which can be a source of additional cost and confusion for both foreign and domestic market participants. Improving corporate governance to better protect investors, enhance company oversight, and increase confidence in capital markets will require broad-based reform. Recent reforms should be fully implemented, and the law on enterprises in each entity fundamentally revised and harmonized with each other and with EU requirements. These efforts should be combined with training and other programs to raise awareness of corporate governance across BiH each including the development of a Code of Corporate Governance. The authority of securities commission should be enhanced, and (as with banking and auditing regulation) consideration should ultimately be given to moving securities regulation to the state level. The process of privatization in each entity has led to hundreds of publicly traded companies and made hundreds of thousands of citizens shareholders. However privatization is not yet complete, and many companies, including most large companies, retain significant state ownership. The legal framework in each entity has largely been developed since 1998, with frequent amendments, and significant guidance from the donor community. Overall, while many elements of a fully functioning capital market are in place, awareness of corporate governance is limited and important legal and institutional gaps remain. 5.3. Comparison of Corporate Governance in Bosnia and Turkey We can summarize the comparison of corporate governance applications in Turkey and Bosnia & Herzegovina in this table. Table 1: Comparison of Turkish and Bosnia & Herzegovina’s Corporate Governance Applications Turkish Corporate Governance It has state level code of Corporate Governance. Importance of Independent board members was mentioned in the code. Bosnia and Herzegovina divided into two entities –The Federation of Bosnia and Herzegovina and the Republic Srpska plus the autonomous Brcko District. So there are two distinct corporate governance regime in Bosnia. Privatization process is not yet complete, many companies including most large companies, retain significant state ownership. Awareness of corporate governance is limited. Legal and institutional gaps remain in Bosnia. Foreign ownership is growing. Companies produce basic financial statements, other reporting is minimal. Ownership disclosure is limited. Companies in Bosnia have a variety of board structures. The limited duties and liabilities of board members are not effectively implemented. Bosnia&Herzegovina’s Corporate Governance There is no state level code of Corporate Governance. There is no definition of requirements for independent board members. Turkey has only one corporate governance regime. Privatization process is more advanced in Turkey, but still there are some state ownership in large companies. Awareness level of corporate governance is getting better in everyday. There are still legal and institutional gaps in Turkey. Foreign ownership is growing. Financial reporting is much better in Turkey. Ownership disclosure is limited. There is only one type board structure in Turkish Companies. The limited duties and liabilities of board members are not effectively implemented. When wee look at the table, we can say that Turkey’s awareness of corporate governance is higher than Bosnia&Herzegovina. Since on December, 2002, Turkish Industrialists’ and Businessmen’s Association introduced the first corporate governance report in Turkey. It has been seven years. During seven years conferences, congresses, executive training programs and researches by academics increased the awareness level of corporate governance. In Bosnia, the only active actor on increasing awareness is World Bank and corporate governance is a very new concept for Bosnia as a transition economy. So, World Bank’s recommendations must be noticed by Bosnia&Herzegovina. 5.4. Recommendations to Bosnia For Having Good Corporate Governance The World Bank had some recommendations to Bosnia&Herzegovina, so we can see the recommendations and what can be done by looking at the table. 78 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo Table 2: World Bank’s Recommendations to Bosnia&Herzegovina To Have Better Corporate Governance CORPORATE GOVERNANCE RECOMMENDETIONS BY WORLD BANK TO BOSNIA Recommendation Institution Building Strengthen the institutional capacity & competence of the Securities Commissions. Prepare recommendations to improve corporate governance of stateowned enterprises. Raise awareness of corporate governance. Give Securities Commissions the authority to levy sanctions and take direct action against issuers (with appeals to courts). Prepare a phased-in program to move securities, and related supervision to state-level regulators. Legislative Framework Develop a strategy for the introduction of closed companies and other elements of a new Law on Enterprises. Introduce a new state-level or tightly harmonized Law on Enterprises based on EU requirements and guidelines. Upgrade and harmonize the Law on Securities and Law on Investment Funds. Boards and Oversight Introduce a single BiH Code of Corporate Governance covering traded companies, PIFs, stateowned enterprises & banks. Increase training for management and supervisory board members. Establish a domestic governance institute. Encourage independent members of boards. Introduce common board structure for all traded companies, Đncluding banks and state-owned enterprises. Introduce board member duties in light of practice in EU countries. Transparency and Disclosure Fully implement the new regime for accounting and auditing. Introduce a standard annual report format. Improve direct disclosure through central registries. Require disclosure of significant indirect ownership in line with EU Transparency Directive. Improve access to company information, including online court register & web portals. Introduce “one window” for company information. Investor Protection Adopt common and improved procedures for major and related party transactions, shareholder redress & changes in share capital. Adopt common provisions for tenders, control transactions, and company conversion. Facilitate shareholder participation in shareholders’ meetings. Consider “mandatory tender offer” and “squeezeout” rights. Require investment funds to disclose and develop policies on ownership and conflicts of interest. How To be Introduced Priority/Status Securities Commissions prepare & adopt Institutional Development Plans. Diagnostic of state owned enterprise corporate governance based on OECD Guidelines. Corporate governance seminars, discussions, and relevant training (ex. through IFC PEPSE). Revisions to Securities and related law. Immediate Immediate Immediate Medium-Term Review of costs and benefits of program. Possible revisions to Securities and related law. Long-Term Establish a state-level working group supported by local and international consultants. Through broad based, state-wide consultation with relevant international support. Immediate Through broad based, state-wide consultation with relevant international support. Medium-Term Extensive consultations with private sector including SASE and BLSE, building on current standards. Private initiatives, including those led by IFC PEPSE. Immediate Part of Corporate Governance Code. New Law on Enterprises, revisions to Law on Public Enterprises, Law on Banks. Immediate Medium-Term New Laws on Enterprises. Medium-Term Based on current efforts. Immediate New regulation based on current efforts. Initiative by securities registrars based on current efforts. Revisions to Securities and related laws. Revisions to Securities and related laws. Immediate Immediate Medium-Term Immediate Medium-Term Based on current efforts. Develop integrated interface covering both SASE & BLSE. State and entity-level legal changes and the commissions, central registries, and stock exchanges. Long-Term New Laws on Enterprises. Medium-Term Revisions to Securities and related laws. Harmonized Law on Takeovers. New Laws on Enterprises with additional guidance from the Code. Revisions to Securities and related laws. Medium-Term Revisions to Securities and related laws based on current efforts with additional training and support. Medium-Term Medium-Term Long-Term Long-Term 79 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo 6. Conclusion At conclusion part, in addition to World Bank’s recommendations, we can say that for growth, development and also sustainable development Bosnia and Herzegovina needs good corporate governance. Because corporate governance make socially responsible and long-term focused companies. They would serve the needs of different stakeholders like customers, employees, suppliers, media, government, competitors in the same industry and society as a whole. After reviewing the recommendations of World Bank, having a national level corporate governance code seems the priority for Bosnia and Herzegovina. By having this, country can shape its own corporate governance model. As mentioned before, there are two types of corporate governance models and both of them their own pros and cons. Bosnia can choose one of these models and can adapt its system compatible to it. Or it can benchmark Turkey, which benchmarked OECD Corporate Governance Principles, and it can adapt the principles to its own country. After that, laws and regulations must be prepared immediately and corporate governance awareness tried to be increased. Amendments and improvements on laws and regulations is the total responsibility of policy makers in Bosnia. Turkish government and governmental organization now working on a new trade law, and the law is being designed to companies for using corporate governance more efficiently and effectively. For increasing corporate governance awareness Bosnia has a long way to go. In Turkey, many private and public organizations and universities are working to increase corporate governance awareness level. In Bosnia, many corporate governance researches and conferences are being prepared by World Bank. The most important one of these is “The South East Europe Corporate Governance Roundtable”. It was established in September 2001, in response to growing awareness among policy-makers and donors in the region regarding the importance of corporate governance. This Roundtable includes participants from nine countries in the SEE region, namely Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Former Yugoslav Republic of Macedonia, Moldova, Montenegro, Serbia, and Romania. The Roundtable has seen some progress in corporate governance, since it issued its White Paper on Corporate Governance in South East Europe in 2003, including a number of legislative and regulatory reforms undertaken in recent years. Corporate governance codes have been developed with the support of the business sector, and stock exchanges have introduced special listing segments requiring higher corporate governance standards. The Roundtable has contributed to this progress not only through policy dialogue and development of recommendations at its meetings, but also through the ongoing efforts of its participants – representatives of stock exchanges, regulators, corporate governance institutes and other reformoriented stakeholders – to raise awareness and support reform initiatives in individual countries. When we look at the studies made by universities, we found that many studies made by the academics from abroad like this study. Domestic universities in Bosnia must increase researches and papers on corporate governance. And future researches must be made on “Corporate Governance Applications and Applicable System in Bosnia and Herzegovina” and corporate governance studies can be made by academics from different disciplines like management, accounting, finance and law. References: Cadbury, A., Cadbury Report, (1992), Financial aspects of corporate governance. Capital Markets Board of Turkey(CMBT), (2003), Corporate governance principles. Claessens, S., (2003), Corporate Governance and Development, Global Corporate Governance Forum. Deakin, S. & Hobbs, R., & Konzelmann, S. J. & Wilkinson, F.,(2005) Anglo-American Corporate Governance and The Employment Relationship: A Case To Answer, Socio-Economic Review, p.155-174, Goergen, M. & Martynova, M. & Renneboog, L. (2005), Corporate governance convergence: Evidence from takeover regulation reforms in europe, Oxford Review of Economic Policy, Vol. 21, No. 2. Khalkho, K. (2007), Sustainable Development and Corporate Social Responsbility, Global Press Release Distribution. Maher, M. & Andersson, T.(1999) Corporate governance:Effects on firm performance and economic growth, Organization for economic co-operation and development(OECD) working paper. Mcgee, R. W. & Preobreganskaya, G. G. (2004), Corporate governance in transition economies:Theory and pratice of corporate governance in eastern europe, Global Conference on Business Economics, Amsterdam, July 9-11. Monks, R. A. G. & Minow N.,(2007) Corporate Governance, Blackwell Publishing. The World Bank, Report on the observance of standarts and codes (ROSC), (2006), Corporate governance country assessments: Bosnia and Herzegovina. Ulgen, H.& Mirze, K. (2004), Đşletmelerde stratejik yönetim, Literatür Yayıncılık. 80 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 144 Title A name given to the resource Corporate Governance and Sustainable Development, A Comparative Analysis on Turkey and Bosnia Herzegovina Author Author KARAYEL, Mete SAYLI, Halil GÖRMÜS, Alparslan Sahin Abstract A summary of the resource. Corporate governance is the system by which business corporations are directed and controlled. This concept is getting more attention in the recent years after many corporation scandals and financial crises. But it has many benefits to companies and countries. When we look at the country side, according to literature, there are several channels through which corporate governance affects growth and development in countries, these channels are: increased access to external financing by firms, a lowering of the cost of capital and associated higher firm valuation, better operational performance through better allocation of resources and better management, reduced risk of financial crises, and better relationships with all stakeholders. In this study we aim to show importance of corporate governance on sustainable development in developing countries. In this direction we will use data acquired from reports and data prepared by World Bank, OECD (Organization for Economic Co-operation and Development) and governmental organizations in these countries. Corporate governance levels and performances of companies and countries and effects of these on growth and sustainable development will be acquired from data. At the conclusion part, we will conclude our study with a comparative country analysis on Turkey and Bosnia Herzegovina and with some suggestions to countries and future researches. Date A point or period of time associated with an event in the lifecycle of the resource 2009-06 Keywords Keywords. Conference or Workshop Item PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/9557ae8b86b9c10032d8632a894e019f.pdf 7cc145f7818bc702d3ccf9e5a67ec071 PDF Text Text 3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo http://eur-lex.europa.eu/en/index.htm http://worldbank.org http://imf.org Corporate Governance Practices in Bosnia and Herzegovina Aida Nušinović International Burch University, Faculty of Economics, 71000, Sarajevo, Bosnia and Herzegovina. E-mail: aida.nusinovic@gmail.com Abstract The purpose of this paper is to present the state of corporate governance in Bosnia and Herzegovina, to determine the degree of its principle applications, and to emphasize the importance of good corporate governance practices for transition economies, such as Bosnia and Herzegovina. Corporate governance, by its simplest definition, presents a system of management and control over the company. Good corporate governance practice is important for the investment climate, because it provides greater security for investors and shareholders and leads to sustainable long-term economic development. Because of the reorganization of the still present economic system, developing countries are faced with many problems related to the implementation of corporate governance, such as insufficient use of existing legislation, underdeveloped capital markets and insufficient bussiness transparency of the company. Foreign investors do not wish to invest in companies that do not apply the principles of corporate governance and studies have shown that for making investment decisions, the application of good corporate governance practices plays an important role. The problems Bosnia and Herzegovina is facing are still a lack of business transparency of company operations, as well as the insufficient protection of minor shareholders. At the end of this paper certain guidelines are given in order to improve practices of corporate governance in Bosnia and Herzegovina, and also the importance of their application to the company and the country itself is highlighted. Keywords: corporate governance, transition economies, economic development, principles, business transparency 1. Definition of Corporate Governance The term of corporate governance is far more complex than thought of at first, and implies not only the way in which a company is governed, but a full range of internal and external relations, as well as legal regulations. According to the definition of the OECD (Organization for Economic Cooperation and Development), corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Good corporate governance should provide proper incentives for the board and management to pursue objectives that are in the interests of the company and its shareholders 278 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo and should facilitate effective monitoring. The presence of an effective corporate governance system, within an individual company and across an economy as a whole, helps to provide a degree of confidence that is necessary for the proper functioning of a market economy. With good corporate governance practice, values as justice, responsibility and transparency of business are promoted. In economic societies in which a clear separation exists between ownership and governance, conflicts of interest appear amongst interested participants in the process of corporate governance, the influence of institutional investors, stockholders, creditors, the administration, and employees. It is necessary that all of these relationships be regulated in the aim of the successful running of the company. According to who has the crucial position and role as concerns the relationships in a company, that is, which interest groups affect decision-making, and in which way do these interest groups participate in corporate governance, we differentiate between two types of corporate governance: - The open corporate governance system The closed corporate governance system The open system of corporate governance is called also the market, outsider, and Anglo American system of corporate governance, and is characteristic for corporations in the countries of the USA, Great Britain, Australia, and New Zealand. In the open system of corporate governance the supervision of management and the company is not in the hands of any influential interest group, while the main role falls to the capital market and the actions of the investors who invest in it. Managers have a key role in governing the company. The closed system of corporate governance is also called the internal (insider) and the European system of corporate governance, and is characteristic for the countries of Europe as well as for countries which have harmonized their corporate governance principles with OECD recommendations which refer to corporate governance. A closed system of corporate governance is often used in countries with a poorly developed capital market and a concentrated ownership structure. It is characteristic of this system for a group of stockholders to hold a large percentage of the total number of stocks, that is, they are the owners of a significant package of stocks, and in this way actively govern the company. In this system, the capital market has a secondary meaning as opposed to the open system of corporate governance. Bosnia and Herzegovina is closer to a closed system of corporate governance, considering its poorly developed capital market, but also due to the other characteristics of the closed system of corporate governance. 2. Corporate governance in developing and transition economies Developing countries are still reorganizing their economic systems, so that they face numerous problems tied to the application of corporate governance, such as the insufficient application of existing legal regulations, lack of personnel for corporate governance, an undeveloped capital market, the still great presence of the state in company ownership, as well as other problems which impede upon the application of corporate governance principles. Good corporate governance practice is extremely important for countries in transition, and has influence on the optimization and growth of the country's economy. A lack of corporate governance practice leads to a negative investment climate, negatively influences the capital market, and impedes upon the further economic growth of the country. Good corporate governance leads towards long-term, sustainable survival of an economy. Developing 279 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo countries need new, fresh capital and due to higher risk, foreign investors do not wish to invest in companies who do not apply the principles of corporate governance, which reduces the chances of the flow of direct foreign investments. 33McKinsey's study has shown that foreign investors are ready to invest 30% more of their resources into shares of companies from Eastern Europe with good corporate governance practice, while 40% of investors stated that corporate governance is a more important factor in deciding whether they will invest in a company in Eastern Europe than growth potential or profit. It is important that a company itself realize that corporate governance improves its economy's competitiveness on the international market. A company with a good corporate governance practice is a transparent and responsible company and as such has greater chances for access to international sources of financing. 3. OECD principles of Corporate Governance OECD principles (Organization for Economic Cooperation and Development) were adopted in the year 1999 and revised in 2004, and they represent elements of good corporate governance and contain recommendations for policy makers, law regulation makers, investors, and companies for OECD countries, as well as in countries outside of the OECD. The principles represent non-binding standards, good customs and instructions for use, and may be adjusted to specific conditions in certain countries. The principles help companies in defining their own corporate governance practices. OECD principles cover six key areas of action: 1) construction of the frame of corporate governance, 2) rights of shareholders and key ownership functions, 3) equal treatment of shareholders, 4) the role of interest groups in corporate governance, 5) publishing of data and transparency, and 6) the board's responsibility. In the aim of promoting the application of OECD principles of corporate governance in countries which are not OECD members, such as Bosnia and Herzegovina, regional round tables were held, in collaboration with the World Bank, in which the policies of corporate governance were discussed. In the year 2002, the Regional Round Table result was the White Paper document - a recommendation on corporate governance in southeastern Europe, which was officially adopted in Sarajevo in the year 2003. White Paper provides a list of practical recommendations, guidelines, and suggestions to policy creators, stock markets, companies, and others who have interest in the application of good corporate governance practices, and helps SEE countries in the promotion of corporate governance practices. This document is primarily focused on companies whose stocks are publically traded, but can also be applied to companies whose stocks are not listed on the stock market. OECD principles as well as recommendations within White Paper help in the development of national codex of corporate governance. One such codex is the corporate governance Codex for companies listed on the Sarajevo Stock Exchange (SASE) which represents a group of the best company leadership practices in the world, adapted to a transitional market such as Bosnia and Herzegovina. The codex includes the following areas: transparency in business, relationships with investors and interest carriers, assemblies, the supervisory board, the administration, auditing and mechanisms of internal control, as well as social responsibility. Accepting the corporate governance codex is a requirement for companies in quotation (A list companies), while the application of the codex is not required of the companies listed and included on the free 33 Christ College Institute of Management, Hosur Road, Bangalore 560 029 280 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo market. A company which has accepted the corporate governance codex is obliged to abide by the provisions of the codex, and if it is unable to implement certain provisions, it is obliged to, within the questionnaire, which is a constituent part of the codex, state why it is not implementing the enclosed recommendations. In this way, investors can decide whether they wish to invest in a certain company on the Sarajevo Stock Exchange. In 2011 also Banja Luka Stock Exchange has adopted the Standards of Corporate Governance with the aim to improve corporate governance practices in companies which are listed on this stock exchange. 4. Corporate governance practices in Bosnia and Herzegovina In order to analyze the application of corporate governance principles in Bosnia and Herzegovina, the World Bank, for the first time in the year 2006, made a Report on the Observance of Standards and the Codes ( ROSC ). An analysis of the following adherence to OECD principles was conducted: Table 1. OECD Principles Section I: Ensuring the basis for an effective corporate governance framework Principles: Overall corporate governance framework; Legal framework enforceable/ transparent; Clear division of regulatory responsibilities; and Regulatory authority, integrity, resources Section II: The right of shareholders and key ownership functions Principles: Basic shareholder rights; Rights to part. in fundamental decisions, Shareholders GMS (general meeting shareholders) rights; Disproportionate control disclosure; Control arrangements allowed to function; Exercise of ownership rights facilitated; and Shareholders allowed to consult each other Section III: Equitable treatment of shareholders Principles: All shareholders should be treated equally; Prohibit insider trading; and Board/Managers disclose interests Section IV: Role of stakeholders in corporate governance Principles: Legal rights of stakeholders respected; Stakeholder redress; Performance-enhancing mechanisms, Stakeholder disclosure; Whistleblower protection; and Creditor rights law and enforcement Section V: Disclosure and transparency Principles: Disclosure standards; Standards of accounting & audit; Independent audit annually; External auditors should be accountable; Fair & timely dissemination; and Research conflicts of interests Section VI: Responsibilities of the board Principles: Acts with due diligence, care; Treat all shareholders fairly; Apply high ethical standards; The board should fulfill certain key functions, Exercise objective judgment, and Access to information 281 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo To adhere to certain principles, the assigned grades were “observed”, “largely observed”, “partially observed”, “materially not observed” and “not observed”. The results of the study are represented in the following table: Table 2. Frequency of Each Category – Compliance with Corporate Governance Principles Principles % Observed 0 0 Largely observed 4 12,5 Partially observed 22 68,8 Materially not observed 6 18,7 Not observed 0 0 Total 32 100 % For adhering to the majority of principles, Bosnia and Herzegovina received the grade “partially observed”. For adhering to the principles of the basic stockholders right, the shareholders GMS rights, the principle stakeholder redress, and the creditor rights law and enforcement, B&H received a poorer grade, namely “largely observed”. The grade “materially not observed”, B&H received for not adhering to the following principles: the rights of shareholders to participate in fundamental decisions, Board/Managers disclosure of interests, stakeholder disclosure, whistleblower protection, disclosure standards and acting with due diligence, care. In no case did Bosnia and Herzegovina receive the grades “observed” or “not observed”. 4.1. Application of Corporate Governance Principles by companies in Federation of BiH In 2011 the independent consulting firm SEE Business Solutions d.o.o. Sarajevo has conducted an analysis of the application of corporate governance principles by companies in Federation of Bosnia and Herzegovina. The study processed 55 joint stock companies. The results according to the analyzed areas were the following: The Management and Supervisory board: in more than 50 % of the analyzed companies the supervisory board consists of only 3 members and only 11% of companies board members are independent, while 38 % members are either stockholders or employees in the company. In 38 companies the compensations for supervisory board members are fixed, and 12 companies don’t pay compensation to the board members. Only 8 companies have formed Commissions of the Supervisory/Management board. Control environment: of the 55 analyzed companies, 43 have established a system of internal control, while the position of internal auditor exists in 28 companies. 31 companies have established a risk management system. Publications: in 23 companies financial reports are available on the web site, which is less then 50% of analyzed companies. Independent auditor’s reports can be found at only 21 web 282 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo sites. Regarding the publishing of transaction with concerned parties and information on materially significant events, 28 companies publish these information. Stockholders' rights and protection: payment of dividends in the past 3 years did only 10 companies, while 45 companies did not pay their dividends. On 38 % companies web sites the information about the general assemblies can not be found. Of the 55 of analyzed companies, 41 companies stated that they formally incorporate social responsibility through internal documents. Based on recommendations given in the OECD report from year 2006 and accordance to the newest researches, we can single out some key courses for corporate governance development in Bosnia and Herzegovina:  The companies should strengthen the supervisory board, increase the number of members, insist upon the independence of members, form commissions for the naming of supervisory board members, as well as define compensation policy for the members of the supervisory board  It is necessary for more companies to organize their own control environment in accordance with their own level of risk exposure and to manage risk more intensively  According to OECD principles, companies should publish all significant information such as financial and business company results, the goals of the company, the ownership structure, data on board members and their compensations, as well as their corporate governance policies  Greater the protection of interests of minor shareholders. Shareholders very often do not have at their disposal important information on the business of the company and this impedes upon their security  The access to relevant information has to be simple and timely, and the publishing of data on transactions of connected parties should be strengthened. This research has shown that joint stockholder companies in the Federation of Bosnia and Herzegovina, and the situation being similar in companies in the smaller Bosnian and Herzegovina entity, the Republika Srpska, have not attained significant improvement in the past few years. The reason for the stated problem can be in the misunderstanding of corporate governance principles and the importance of incorporating good corporate governance practices. 5. Conclusion Good corporate governance practice decreases the risk for investors, increases the performance of the company, improves access to capital markets, increases transparency and social responsibility in business. Since the goal of Bosnia and Herzegovina is to get closer to the European Union, companies will have to incorporate corporate governance principles in their business transactions if they wish to be competitive on the international market. Spreading good corporate governance practice implies recognizing the significance and the usefulness of corporate governance for the company as well as for the country itself. Corporate governance is important, for the country, the companies, as well as for society as a whole. Corporate governance leads to the achievement of social wealth, increases competitiveness on the international capital market, leads towards a positive investment climate, and to the long-term development of the economy. Good corporate governance 283 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo practice contributes to the greater transparency of business, better supervision of the company, and therefore its better reputation. For the aim of further promotion of corporate governance, special care should be taken of the greater promotion of good corporate governance practice, greater protection of the interests of minor shareholders, strengthening the role of the supervisory board, greater compliance of entity laws, as well as greater transparency in company's business transactions. In the past years, corporate governance gained more importance, and many studies have shown that the application of good corporate governance practices leads to the greater value of the company and a smaller risk of financing. REFERENCES Ana Bobirca, and Paul-Gabriel Miclaus (2007), Extensiveness and Effectiveness of Corporate, Governance Regulations in South-Eastern Europe. Corporate Governance Country Assessment, Bosnia and Herzegovina, June 2006 , http://www.worldbank.org/ifa/rosc_cg_bih_eng.pdf. Corporate Governance in FBiH – the results of research in 2011., SEE Business Solution d.o.o. Sarajevo , http://conference.capitalmarket.ba/6/prezentacije/Sanja%20Jokic.pdf Corporate Governance Codex SASE ( 2009. ), http:/www.sase.ba and Standards of Corporate Governance BLSE ( 2011 ) http://www.blberza.com Corporate Governance, News in international standards, legislation and practice in Bosnia and Herzegovina (2008 ), Revicon. Dr. Hubertus G. Tschopp ( 2002 ), Corporate governance, The Key to Success of Failure, Boardroom, Magazine of Corporate Governance, Leadership and Quality of Life. Mc Kinsey ( 2000 ), Global investor Opinion Survey on corporate Governance. OECD Principles of corporate governance ( 2001 Edition ). Robert W. McGee ( 2008 ), Corporate Governance in Transition Economies, Springer. White paper on Corporate Governance in South East Europe (2003.), OECD 2003 www.stabilitypackt.org Economic Diplomacy and Business Negotiation- managerial approach Amra Nušinović, Erkan İlgun International Burch University, Faculty of Management, 71000, Sarajevo, Bosnia and Herzegovina. E-mail: amra.nus@gmail.com Abstract Economic Diplomacy explains how states conduct their external economic relations in the 21st century: how they make decisions domestically; how they negotiate internationally; and 284 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1335 Title A name given to the resource Corporate Governance Practices in Bosnia and Herzegovina Author Author Aida , Nušinović Abstract A summary of the resource. The purpose of this paper is to present the state of corporate governance in Bosnia and Herzegovina, to determine the degree of its principle applications, and to emphasize the importance of good corporate governance practices for transition economies, such as Bosnia and Herzegovina. Corporate governance, by its simplest definition, presents a system of management and control over the company. Good corporate governance practice is important for the investment climate, because it provides greater security for investors and shareholders and leads to sustainable long-term economic development. Because of the reorganization of the still present economic system, developing countries are faced with many problems related to the implementation of corporate governance, such as insufficient use of existing legislation, underdeveloped capital markets and insufficient bussiness transparency of the company. Foreign investors do not wish to invest in companies that do not apply the principles of corporate governance and studies have shown that for making investment decisions, the application of good corporate governance practices plays an important role. The problems Bosnia and Herzegovina is facing are still a lack of business transparency of company operations, as well as the insufficient protection of minor shareholders. At the end of this paper certain guidelines are given in order to improve practices of corporate governance in Bosnia and Herzegovina, and also the importance of their application to the company and the country itself is highlighted. Keywords: corporate governance, transition economies, economic development, principles, business transparency Date A point or period of time associated with an event in the lifecycle of the resource 2012-05-31 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance,HJ Public Finance https://omeka.ibu.edu.ba/files/original/7815c7b8bc808c9c5d9c76d3b07bc379.pdf 015fb9aa997e77d9899ee0b01495fd8e PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Corporate University: Beliefs and Misbeliefs Zoltan Baracskai Zagreb University, Zagreb, Croatia zoltan@odluka.com Viktoria Szoboszlai Zagreb University, Zagreb, Croatia victoria.szoboszlai@americanleaders.com During the process of putting together the program for an American and two European Corporate University Summits, we have gathered dozens of opinions from industry practitioners. Based on our own research and on some industry leading magazines (Chief Learning Officer Magazine, Harvard Business Publishing Corporate Learning, Elearning! Magazine, Learning Solutions Magazine) we are close to the problem definition. Post-experiential business education, which is at the heart of a Corporate University, can make two fundamental mistakes: the first is to attempt being a school, the second is not to attempt being a school. We may try building a bridge between ‘know how’ (University) and ‘know when’ (Corporation), the problem is that we do not know how to get from ‘know how’ to ‘know when’. A modern Corporate University helps those who are hungry for new knowledge to understand the contexts and ideally, in choosing the right professional path. The CU's task is to supplement the entrylevel knowledge with the most important, solution-oriented “mainstream” types of knowledge while helping practitioners to understand why exactly that the learning content is, and not something else (and thus, where the world is heading). The practitioner learns this way the most important part: to acquire the necessary knowledge to complete his task. He learns how he can supplement his own existing knowledge with the available knowledge: that of the others or of the gurus – he learns how to search, share and validate. This process is difficult for everyone in different ways. There are those whose challenge is the difference between the levels of brought and acquired knowledge while there are others whose challenges are the hurdles of their own professional path related dilemma. A Corporate University enables the practitioners to step out of their position's comfort zone and to return again according to their areas of interest and to their own knowledge level. Everyone can take from the content and use what he really needs and where his interest is, the rest is optionally available – just like the different tools of a Swiss Army Knife. Keywords: University, Beliefs, Misbeliefs. 280 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1682 Title A name given to the resource Corporate University: Beliefs and Misbeliefs Author Author BARACSKAI, Zoltan SZOBOSZLAI, Viktoria Abstract A summary of the resource. During the process of putting together the program for an American and two European Corporate University Summits, we have gathered dozens of opinions from industry practitioners. Based on our own research and on some industry leading magazines (Chief Learning Officer Magazine, Harvard Business Publishing Corporate Learning, Elearning! Magazine, Learning Solutions Magazine) we are close to the problem definition. Post-experiential business education, which is at the heart of a Corporate University, can make two fundamental mistakes: the first is to attempt being a school, the second is not to attempt being a school. We may try building a bridge between ‘know how’ (University) and ‘know when’ (Corporation), the problem is that we do not know how to get from ‘know how’ to ‘know when’. A modern Corporate University helps those who are hungry for new knowledge to understand the contexts and ideally, in choosing the right professional path. The CU's task is to supplement the entrylevel knowledge with the most important, solution-oriented “mainstream” types of knowledge while helping practitioners to understand why exactly that the learning content is, and not something else (and thus, where the world is heading). The practitioner learns this way the most important part: to acquire the necessary knowledge to complete his task. He learns how he can supplement his own existing knowledge with the available knowledge: that of the others or of the gurus – he learns how to search, share and validate. This process is difficult for everyone in different ways. There are those whose challenge is the difference between the levels of brought and acquired knowledge while there are others whose challenges are the hurdles of their own professional path related dilemma. A Corporate University enables the practitioners to step out of their position's comfort zone and to return again according to their areas of interest and to their own knowledge level. Everyone can take from the content and use what he really needs and where his interest is, the rest is optionally available – just like the different tools of a Swiss Army Knife. Keywords: University, Beliefs, Misbeliefs. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/eeb64d52480aa1ec5fabf764e32d3e4d.pdf c8039123bf7fa7db518fd382998fb1c7 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Corporation Tax Rate-Revenue Paradox: Income Shifting and Corporatization Ahmet Aysu Dokuz Eylül University, İzmir, Turkey ahmet.aysu@deu.edu.tr Gökhan Dökmen Bülent Ecevit University, Zonguldak, Turkey gokhan.dokmen@beun.edu.tr Governments have reduced the corporate tax rate to attract foreign capital in the process of globalization especially after the 1980s. Additionally, they have taken some measures supportively such as tax incentives and tax exemption for this goal. These tax competition practices brought up some questions and concerns about financing public spending issue. But corporate tax revenue actual data shows relatively stable path over the time while corporate tax rates are reducing among countries. Some researches called this doubtful fact “corporate tax rate-revenue paradox” and explaining it with corporatization and income shifting effects. In this study we examine the development of corporate tax rates and revenues in EU countries briefly. Then we are trying to analyses which factors are dominant in this paradox using available annual panel data for EU countries. In empirical part of the study we employ panel unit root tests for determining the stationarity of data set. After this procedure we perform alternative estimation techniques and provide estimation results. According to these result threats and opportunities are evaluated at national tax policy perspective and at union level. Keywords: Corporate Tax, Corporate Tax Revenue, Corporate Tax-Revenue Puzzle, Panel Estimation, European Union. 12 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1457 Title A name given to the resource Corporation Tax Rate-Revenue Paradox: Income Shifting and Corporatization Author Author AYSU, Ahmet DOKMEN, Gökhan Abstract A summary of the resource. Governments have reduced the corporate tax rate to attract foreign capital in the process of globalization especially after the 1980s. Additionally, they have taken some measures supportively such as tax incentives and tax exemption for this goal. These tax competition practices brought up some questions and concerns about financing public spending issue. But corporate tax revenue actual data shows relatively stable path over the time while corporate tax rates are reducing among countries. Some researches called this doubtful fact “corporate tax rate-revenue paradox” and explaining it with corporatization and income shifting effects. In this study we examine the development of corporate tax rates and revenues in EU countries briefly. Then we are trying to analyses which factors are dominant in this paradox using available annual panel data for EU countries. In empirical part of the study we employ panel unit root tests for determining the stationarity of data set. After this procedure we perform alternative estimation techniques and provide estimation results. According to these result threats and opportunities are evaluated at national tax policy perspective and at union level. Keywords: Corporate Tax, Corporate Tax Revenue, Corporate Tax-Revenue Puzzle, Panel Estimation, European Union. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/7c42d719c73331126c9a0eaf71e3ff0e.docx 58262cd60101f252a68961fe83beb009 https://omeka.ibu.edu.ba/files/original/a8dbaa4243e99ddcf997f2620d6a25c7.pdf 6e3824eea77fa532b75c2db3ce6a5c63 PDF Text Text Correction of the Negative Feedback in Teaching Italian Language as L2 at the University of Banja Luka Danilo Capasso University of Banja Luka/ Banja Luka, Bosnia and Herzegovina Key words: Explicit correction, recast, prompt, acquisition, Italian language, techniques of correction ABSTRACT Focusing on three types of corrective feedback strategies in the acquisition of Italian language as L2, namely explicit corrections, recasts and prompts, the current paper’s aim is to demonstrate how these strategies improve the acquisition of L2 in learners whose level is B1/B2. Which one give the best effects in the correction techniques?Which strategy is mostly accepted by the learners? Can these strategies be used in the written feedback? Some answers demonstrate that the effects of explicit corrections, recasts and prompts have rarely been examined from learners’ own perspectives and more studies in this direction are needed. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1720 Title A name given to the resource Correction of the Negative Feedback in Teaching Italian Language as L2 at the University of Banja Luka Author Author CAPASSO, Danilo Abstract A summary of the resource. Key words: Explicit correction, recast, prompt, acquisition, Italian language, techniques of correction ABSTRACT Focusing on three types of corrective feedback strategies in the acquisition of Italian language as L2, namely explicit corrections, recasts and prompts, the current paper’s aim is to demonstrate how these strategies improve the acquisition of L2 in learners whose level is B1/B2. Which one give the best effects in the correction techniques?Which strategy is mostly accepted by the learners? Can these strategies be used in the written feedback? Some answers demonstrate that the effects of explicit corrections, recasts and prompts have rarely been examined from learners’ own perspectives and more studies in this direction are needed. Publisher An entity responsible for making the resource available IBU Publishing Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-03 Keywords Keywords. Article PeerReviewed https://omeka.ibu.edu.ba/files/original/aef3aac8f7d600aa8f864d39b6c88c1d.pdf 2669e7be2a2d95dda231428ada0dc060 PDF Text Text 1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo Corrective feedback on the oral production and its influence in the intercultural classes Ceylani Akay English Department, International Burch University Sarajevo, Bosnia and Herzegovina ceylaniakay@hotmail.com Azamat Akbarov English Department, International Burch University Sarajevo, Bosnia and Herzegovina aakbarov@ibu.edu.ba Abstract: The role of error correction or corrective feedback has been studied and emphasized since the beginning of language learning. The term largely relates to the four skills of language such as reading, writing, speaking and writing. This article will focus on the oral production and will have a look at language acquisition in an intercultural classes. The positive feedback will be discussed and the attitude of the teacher towards the learners will be explored through the research. The language learning can be effected negatively or positively by the way of the teachers‘ attitude towards the learner. The article focuses on the different examples of corrective feedback and its influence in the intercultural classes. 1. Introduction The error correction and corrective feedback in the field of Second Language Acquisition plays a very important role. While orrective feedback clearly relates to both oral and written discourse, the focus of this discussion will focus on oral production, since the majority of research has largely focused on this aspect. We are going to focus on the positive factors on the language learners. The error correction should be carefuuly chosen according to the aim of the language activity. Since we are focusing on the oral production, the accuracy or the fluency should be our main criteria when we decide the time of the correction. In the oral production, the fluency in my opinion should be the main focus so that the corrective feedback can be given after the speaking process. Otherwise the learner can be effected negatively and the reticence appears in a large scale. 2. The definition of the corrective feedback and the error correction We come across many different terms in identifying errors in the SLA literature. To give a brief review of the definitions of terms and of the different types of feedback would be very useful. Chaudron (1988) has pointed out the fact that the term corrective feedback incorporates different layers of meaning. In Chaudron‘s view, the term ―treatment of error‖ may simply refer to ―any teacher behavior following an error that minimally attempts to inform the learner of the fact of error‖ . The treatment may not be evident to the student in terms of the response it elicits, or it may make a significant effort ―to elicit a revised student response‖ . Finally, there is ―the true‖ correction which succeeds in modifying the learner‘s interlanguage rule so that the error is eliminated from further production. Lightbown and Spada (1999) define corrective feedback as: Any indication to the learners that their use of the target language is incorrect. This includes various responses that the learners receive. When a language learner says, ‗He go to school everyday‘, corrective feedback can be explicit, for example, ‗no, you should say goes, not go‘ or implicit ‗yes he goes to school every day‘, and may or may not include metalinguistic information, for example, ‗Don‘t forget to make the verb agree with the subject‘. 270 �1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo According to Schachter (1991), corrective feedback, negative evidence, and negative feedback are three terms used respectively in the fields of language teaching, language acquisition, and cognitive psychology. Different researchers often use these terms interchangeably. The feedback can be explicit (e.g., grammatical explanation or overt error correction) or implicit. Implicit correction includes, but is not limited to, confirmation checks, repetitions, recasts, clarification requests, silence, and even facial expressions that express confusion. In addition, Krashen (1982, 1985) believes that SLA is the result of implicit processes operating together with the reception of comprehensible input. Conscious learning can only act as a monitor that edits the output, after it has been initiated by the acquired system. Krashen‘s input hypothesis posits that it is subconscious acquisition that gains dominance, and that learning cannot be converted into acquisition, even though adults can both subconsciously acquire languages and consciously learn about languages. In short, for Krashen, as for the nativists, negative evidence has a barely discernable effect on SLA. Krashen‘s views and theories of language learning have been challenged on the grounds that while comprehension is essential for language acquisition, such acquisition does not entail unconscious or implicit learning processes; and that noticing is indispensable for the acquisition process (Ellis, 1991; Gass, 1988, 1990, 1991; Gass & Varonis, 1991; Schmidt, 1990, 1994; Schmidt & Frota, 1986). According to the noticing hypothesis, in order for input to become intake for L2 learning, some degree of noticing must occur, and that it is corrective feedback that triggers that learners‘ noticing of gaps between the target norms and their IL, and thus leads to subsequent grammatical restructuring. According to Schmidt (1990), ―subliminal language learning is impossible, and that intake is what learners consciously notice. This requirement of noticing is meant to apply equally to all aspects of language‖ (p. 149). Language learners, however, are limited in what they are able to notice. The main determining factor is that of attention. As Schmidt (1994) points out, ―while the intention to learn is not always crucial to learning, attention to the material to be learned is‖ (p. 176). Attention, in addition, ―also controls access to conscious experience‖ (p. 176), thus allowing the acquisition of new items to take place. Gass (1988, 1990, 1991. According to her, for learners to be able to internalize input in order to affect the acquisition process, they must not only comprehend this input, but also must notice the mismatch between the input and their own IL system. She points out that ―nothing in the target language is available for intake into a language learner‘s existing system unless it is consciously noticed‖ (1991, p. 136). Corrective feedback, for Gass, functions as an attention getting device. She further argues that without direct or frequent corrective feedback in the input, which would permit learners to detect discrepancies between their learner language and the target language, fossilization might occur. Gass and Varonis (1994), moreover, point out that ―the awareness of the mismatch serves the function of triggering a modification of existing L2 knowledge, the results of which may show up at a later point in time‖ (p. 299). Similarly, Ellis (1991) shares the view that the acquisition process includes the steps of noticing, comparing, and integrating. 3. How and when to correct errors The way we correct the errors and the corrective feedback effects the attitude of the learners towards the target language. Here I would like to mention a few important points in error correction. 1. Be aware of the goals of the lesson, and the students‘ levels. Students gain the most from error correction when it‘s focused on a particular goal, which we always tie to the main learning objective of the lesson. For example, if the goal of a lesson is to learn the irregular forms of past tense verbs, and we do a speaking activity to reinforce that aim, l correct mistakes connected to the use of those particular verbs. In this controlled setting, the students tend to remember their specific mistakes from one lesson to the next. If a student is making mistakes with a structure that they haven‘t been introduced to yet, correct it, because chances are, they won‘t retain it. On the other hand, when higher level students struggle with structures and patterns that they‘ve learned once, twice or even multiple times, focus on correcting those errors. 271 �1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo 2. Encourage self-correction. Encouraging self-correction puts the learning process into the hands of the students, and allows for learning to happen beyond the confines of the classroom. Often, when a student makes a mistake, point out that a mistake has been made, and wait for the student to find it and correct it herself (often with the help of her classmates). For example, if an intermediate student says, ―He go to the store,‖ stop the student by repeating what he has said. ―He go?‖ ―He go?‖ The aim is to draw attention to it, leading the student to re-think what he has said. After making the mistake a few times, they‘ll begin to catch themselves. 3. Be aware of timing, and how to correct. Note down some basic or central mistakes, and bring them up later. One tactic is to write example sentences on the board, containing some of the same mistakes, and have students find and correct them. This approach ties in the method of self-correction and puts the learning process back into the hands of the students. 4. Do not waste time correcting mistakes In the language learning mistakes are inevitable. As the teacher do not waste time correcting and repeating the correct form. Allow the students make mistakes and learn fro thir mistakes. 4. Intercultural classes and corrective feedback influence on them Cultural differences cause a variety of errors in the SLA. When we have several nationalities and cultures in one classroom the teacher should be very careful for the corrective feedback. In the International School of Sarajevo, Bosnia and Herzegovina I had a chance to observe about 10 different nationalities learning English in the same class. The students have different background of English language and they have different cultural background. The students take mother tongue interference to the class in various ways. The difficuly appears when we correct the errors and they all take these corrections in a different way. So the best way is to deal with the kids individually as much as posssible and orally the aim of our teaching is having good conversation with the students. The input they get from their teachers and being a good sample is very important. The more correct input they get the more they learn. I myself observed the age 6 or 7 children learning English in a year time very fluently by a lot of input given by their teachers. And the corrective feedback given at the right time and the amount play a very important role on these children. 5. Conclusion I think that normally the students are asked to speak too soon, when they aren't ready, so the mistakes are more frequent. Another important point is that sometimes the learners know the correct way to speak but they aren't used to produce it while speaking. In any case, the problem can be solved by having more input. When we speak we don't like to be corrected. Because we are focusing in communicating ideas and in being able to understand what has been said. You don't mind while you're producing the language. You don't have to take notes. But you can know what are your weak points. The mistakes are inevitable in learning SLA, the only way to correct and give positive feedback is choosing the right time. As the article suggests, especially in the intercultural classes the students get a lot of input and the mistakes are corrected in an appropriate way so the children learn the target language with less problems and this leads them use the language fluently. 272 �1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo Correcting errors in a communicative speaking class needs a serious treatment since every learner will give different reaction to the feedback given by teachers. The aim of speaking class is to make the learners use the language they learn. That is why, it is worth considering that teachers should be more tolerant to the students errors in speaking class. It is hoped that the teachers correct selectively, choose productive items, and correct constructively. Creating a very good atmosphere in the classroom is very essential to gain the successful language learning. According to Mendelshon (1990) this is connected to classroom management , and the attitudes that develops in the class. It is strongly believed that the classroom atmosphere should be built on a premise of mutual respect. This means learners and the teachers should respect each other. The classroom must be healthy ; in a communicative speaking class there should be a place where there is a lot laughing with others, but there is never any laughing at anyone. The speaking class should be a sheltered environment in which it is always safe to take risk for the students to try thing out without fear or ridicule. By this the learners might be more confident to use the language they are learning. Correcting errors is a delicate matter and correction must always be handled with care. The teachers should be careful when correcting errors. Different learners and different cultures will react to feedback given by their teachers in different way. 273 �1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo References: Allwright, R. L. (1975). Problems in the study of the language teacher‘s treatment of error. Bohannon, J. N., & Stanowicz, L. (1988). The issue of negative evidence: Adult responses to children‘s language errors. Developmental Psychology, 24, 684-689. Bley-Vroman, R. (1986). Hypothesis testing in second language acquisition. Language Learning, 36, 353-376. Carroll, S., & Swain, M. (1993). Explicit and implicit negative feedback: An empirical study of the learning of linguistic generalizations. Studies in Second Language Acquisition, 15, 357-386. Chaudron, C. (1977). A descriptive model of discourse in the corrective treatment of learners‘ errors Chomsky, N. (1975). Reflections on language. New York: Pantheon. DeKeyser, R. (1993). The effect of error correction on L2 grammar knowledge and oral proficiency. Modern Language Journal, 77, 501-514. Corrective feedback in SLA Doughty, C., & Williams, J. (1998). Pedagogical choices in focus on form. In C. Doughty & J. Williams (Eds.), Focus on form in classroom second language acquisition (pp. 197-261). New York: Cambridge University Press. Ellis, R. (1991). Grammar teaching practice or consciousness-raising? In R. Ellis (Ed.), Second language acquisition and second language pedagogy (pp. 232-241). Clevedon, UK: Multilingual Matters. Gass, S. M. (1988). Second language vocabulary acquisition. Annual Review of Applied Linguistics, 9, 92-106. Gass, S. M. (1991). Grammar instruction, selective attention, and learning. In R. Phillipson, E. Kellerman, L. Selinker, M. Sharwood Smith, & M. Swain (Eds.), Foreign/second language pedagogy research (pp. 124-141). Clevedon, UK: Multilingual Matters. Krashen, S. D. (1985). The input hypothesis: issues and implications. New York: Longman. Lightbown, P. M., & Spada, N. (1990). Focus-on-form and corrective feedback in Communicative Language Teaching: Effects on second language acquisition. Studies in Second Language Acquisition, 12, 429-448. Lightbown, P. M., & Spada, N. (1999). How languages are learned. Oxford, UK: Oxford University Press. 274 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 41 Title A name given to the resource Corrective feedback on the oral production and its influence in the intercultural classes Author Author Akay, Ceylani Akbarov, Azamat Abstract A summary of the resource. The role of error correction or corrective feedback has been studied and emphasized since the beginning of language learning. The term largely relates to the four skills of language such as reading, writing, speaking and writing. This article will focus on the oral production and will have a look at language acquisition in an intercultural classes. The positive feedback will be discussed and the attitude of the teacher towards the learners will be explored through the research. The language learning can be effected negatively or positively by the way of the teachers‘ attitude towards the learner. The article focuses on the different examples of corrective feedback and its influence in the intercultural classes. Date A point or period of time associated with an event in the lifecycle of the resource 2011-05 Keywords Keywords. Conference or Workshop Item PeerReviewed P Philology. Linguistics Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 942 Title A name given to the resource Correlation between Teaching Strategy and Students’ value Orientations at Higher education institutions(International University of Sarajevo and University of Travnik) Author Author Obralic, Nudzejma Obralic, Hanifa Abstract A summary of the resource. Old methodology did not pay a lot of attention to the students' needs, interests and value orientation. The reason for that was the fact that the teaching strategies considered a teacher-centred methodology. Nowadays, it is becoming more and more students-centered way of teaching. Students' needs and value orientations are becoming primary doctrine applied within process. Therefore, we can say that they shape the world's outlook. In practice, it is a bit complicated in the higher education institutions when it comes to matching teaching strategies and students’ value orientations. In depth, the methodology meets various implications of the challenges. Post-war education system in Bosnia and Herzegovina requires comprehensive redesigning reforms, and at the same time requires to be attended to it with earnestness. We claim that the reform of the education system in Bosnia should be taken into the consideration and integrate the students’ value orientation and apply the curriculum done right after the brief analysis of the previous curriculum, syllabus and textbooks. Learners’ ethnic and cultural background should play an important role while teaching. The aim of paper will be to clarify the scope of students' value orientation and teaching strategy, to what extand it is payed attention within education system and the importance of its correlation. Therefore, teaching strategies together with the experiments, lectures and skills integrated activities with the realm of values need to promote the objectives of students’ value orientation. The finding of the research points out to what extents is the correlation between teaching strategy and students’ value orientation important in order to obtain the learning environment and achieve knowledge. Date A point or period of time associated with an event in the lifecycle of the resource 2012 Keywords Keywords. Conference or Workshop Item PeerReviewed P Philology. Linguistics https://omeka.ibu.edu.ba/files/original/42ab8a58a755c6b5e6d7272b62f7f3b2.docx a0e697dab4037399091c3f5d68bff62f https://omeka.ibu.edu.ba/files/original/e638fb6a6a7c784e6528984672b855f2.pdf a8e9ec083711136af74da20c4254b9d3 PDF Text Text Correlation between the Initial Consonants and Tone Perception Patterns Guohua Hu University of Gothenburg/ Gothenburg, Sweden Key words: L2 Chinese, Disyllablic Words, Perception, L1 Swedish ABSTRACT Many tests have been performed in order to find out how adult learners perceive the tones of Standard Chinese and also how they manage to produce them. The conclusions are that the students master the Standard Chinese (SC) tones (T) when it comes to the so-called static tones (in isolated syllables). However, most modern words in SC are di- or polysyllabic so one tone has to combine with another one (dynamic tones), the so-called tone combinations (TC). Earlier studies on the perception of Chinese tones (i.e. Chuang, et al. 1972; Gandour 1978; Guo 1993:330334; Kiriloff 1969; Klatt 1973) have claimed that the more syllables a word contains the higher is the ratio of misperceived tones. Yet the tests almost exclusively used monosyllabic words. According to the results of their studies the most common misper-ception, regardless of what non-tonal L1 the listeners might have, has shown to be that of T2 and T3. No studies were, however, found investigating how Swedish students perform so a test was presented. It was the listening test of their annual exam (25 words) which pushed the par-ticipants to perform well. The results show that (1) on monosyllable level (each syllable in disyllabic words) most of the confusions are, in accordance to earlier studies, between T2 and T3; (2) the stops may be the cause for the confusions between T2 and T3; (3) the neutral tone in the second syllable is always confused with T4; (4) on disyllabic level most TC confusions fall upon 2+3 and (5) the commonmost misinterpretation response is 2+4 which to a certain degree sounds simi-lar to the Swedish grave or acute accent. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2009 Title A name given to the resource Correlation between the Initial Consonants and Tone Perception Patterns Author Author HU, Guohua Abstract A summary of the resource. Key words: L2 Chinese, Disyllablic Words, Perception, L1 Swedish ABSTRACT Many tests have been performed in order to find out how adult learners perceive the tones of Standard Chinese and also how they manage to produce them. The conclusions are that the students master the Standard Chinese (SC) tones (T) when it comes to the so-called static tones (in isolated syllables). However, most modern words in SC are di- or polysyllabic so one tone has to combine with another one (dynamic tones), the so-called tone combinations (TC). Earlier studies on the perception of Chinese tones (i.e. Chuang, et al. 1972; Gandour 1978; Guo 1993:330-334; Kiriloff 1969; Klatt 1973) have claimed that the more syllables a word contains the higher is the ratio of misperceived tones. Yet the tests almost exclusively used monosyllabic words. According to the results of their studies the most common misper-ception, regardless of what non-tonal L1 the listeners might have, has shown to be that of T2 and T3. No studies were, however, found investigating how Swedish students perform so a test was presented. It was the listening test of their annual exam (25 words) which pushed the par-ticipants to perform well. The results show that (1) on monosyllable level (each syllable in disyllabic words) most of the confusions are, in accordance to earlier studies, between T2 and T3; (2) the stops may be the cause for the confusions between T2 and T3; (3) the neutral tone in the second syllable is always confused with T4; (4) on disyllabic level most TC confusions fall upon 2+3 and (5) the commonmost misinterpretation response is 2+4 which to a certain degree sounds simi-lar to the Swedish grave or acute accent. Publisher An entity responsible for making the resource available IBU Publishing Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-03 Keywords Keywords. Article PeerReviewed https://omeka.ibu.edu.ba/files/original/e2abb8406c1a0782c223599b3faa2668.docx 099ccf516d53890b3983a418c77ccbbc https://omeka.ibu.edu.ba/files/original/a7c1572626415fa526d040c9bca8bd69.pdf 48c9452800b982c340e13e3fd9d7e5aa PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Correlation Effects of Family and School in Combating Resources and Drugs Fatima Karišik International University in Novi Pazar, Novi Pazar, Serbia fatimakarisik@yahoo.com Abstract Alarming data about the number of young people who abuse drugs and drug clearly indicate the topicality of studying this subject. There is more meaning to this topic and also is socially important because the youth is the pillar of any society. Social significance is reflected in the fact that society has an important role in reducing substance abuse and drugs. Studying and developing cooperation with families and schools to fight substance abuse and drug use is very important for pedagogy as a science of education, especially for the families and school counselors. The situation as it is now in our society unambiguous and clearly shows that have already matured enough to form its own sub discipline pedagogical way to deal with the phenomenon of combating substance abuse and drugs. To achieve success in solving the problem of family and school cooperation has to be at a high level, it must be continuous with continuous exchange of views and ideas on solving it. Educational influences of family and school are a very powerful tool when it comes to the formation of a healthy personality and quality, which will be capable of resisting the most difficult types of voices. Until recently even in pedagogical circles, they supported the view that it is best not to talk about drugs in the school, because it was thought that people would be awakened and deepened curiosity. It is important to emphasize that this is a very wrong attitude; on the contrary we believe that children need to talk openly about it, both with their families and at school. Because the family and school environment conducive to the creation of a free individual, the freeing of his creative potential and self-confidence, we believe that an institution of vital importance to the individual and are essential for solving an instance of such a complex problem. Keywords: Family, School, Education, Drugs and Drug Community. Introduction Mankind knows that there are drugs from prehistory to the present. The first record of contact by man and drugs comes from the late Pal Eolithic era. There is no way to determine exactly when the people used intoxicants and drugs, but it's safe to say that it was quite a long time ago. Those who are familiar with the issue believe that resources should be sought first and foremost in psychic immaturity of personality, in people's serious mental condition, and find a way out of the crisis. 1 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo According to the World Health Organization's dependence on drugs (psychoactive substances) especially the mental condition, and often the physical condition that occurs, this means that the action is addictive to the body and the body reacts to it. Dependence is characterized by the experience of coercion to occasionally or regularly take the medication that is addictive or not, and that you either get the experience on the desired effect or to avoid the inconvenience of taking the resources. Some children in the opinion of many experts still have characteristics of small behaviors that are almost a sure sign that will become addicted to some sort of drug. Such children do not behave from their toddler years and on, they are very sensitive in the foreground emphasize themselves. It is very easy to disappoint people, and finding meaning in life. Those who study these issues generally believe that parents should bear the greatest responsibility. All professionals and the public warn parents to constantly monitor the child the must check who they hang out with, and monitor how they behave. However, the truth is that a large quantity of narcotics and drugs found in school yards and satchel directly in the process of solving problems with their personal lives and school issues as well. Schools can play a significant role in reducing the risk of substance abuse and drug used among students. In particular, it is of great importance in areas of cooperation of family and school when it comes to solving this complex problem. Family Enables adoption of values and the formation of a world view, On the other hand, the schools provide education for children's educational contents and encourage them to self-study. The school greatly influences the formation of attitudes of young people, so together with our families we can make a complete system that can help young people to overcome the addiction. In order to resolve the problem with addiction the problem and to achieve success it is necessary to educate parents, teachers and students. In the process of educating and providing information on the problem of addiction and its prevention in addition educational institutions can participate in media, society, nongovernmental organizations ...The media should be more open to the problem of addiction, it needs to be more talk about the primary prevention and education on preventing youth, parents and teachers. The media approach with this problem should be systematic and must start with more sides to the problem, as sources multidimensional. Important role in the education of parents, students and teachers can have an impact on the community. Society cannot just restrictive its attitude towards substance abuse and drug legislation to combat this phenomenon. It is clear that they must undertake some activities that will interest young people and involve them directly in combat substance abuse and drug use. Developing prevention programs are opening roads conversation, understanding and acceptance of young people. According to the OUN Prevention there are more forms and activities:  Through education - awareness, awareness affect changes on production, trade and drug abuse, the mental attitude and behavior 2 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo  Radical changes in attitudes towards drugs and the creation of new ones  Adequate drug treatment and social reintegration Successful implementation of prevention of addiction involves the knowledge of parents and teachers about the hazards of smoking tobacco, drinking alcohol, and the first signs of substance abuse and drug use. Parents and teachers need to know and implement prevention programs to give the children the basic information about substance abuse and addiction and the consequences of their use. It is the duty of the parents and teachers to talk openly about substance abuse with children. Tell the truth to young people means to convince them to short-term pleasure, relaxation and forget problems that they allow intoxicants are not worth the agony of acting and ruins their lives. Schools and families must face the problem, if it should come. If signs lead to the realization that a child uses the drug, it's time to take appropriate action. Directly facing the fact that the child uses intoxicants and drugs increases the chances of success and recovery. We should not waste time, hiding behind the problem we should act quickly and have an efficient operation of educational influences through family and schools they are the safe path to solving the problem. The child should be able to speak freely and openly to express doubts about his behavior in school and at home. Teachers and family members must first jointly consider all the ways that might be helpful. We believe that the cooperation between families and schools play an important role in regaining control over risk substance abuse and drugs. Students who are most at risk are those who are pushed into the background. However, schools with the support of parents and their actions can provide a secure environment, can promote a sense of belonging and create opportunities for success in school, and at home. Well-trained teachers and parents can help in informing the professional level, of presentations the problem. It can encourage the willingness to talk at any time; can empower parents to show maximum skill in solving the addiction problem, because in such situations, parents need the most composure and absolute correctness of each of the following actions or gestures. We believe that modern society should strive to achieve the modern concept of education. Therefore this process must involve the inclusion of families in the school. In solving the problem of addiction quality family-school communication can be extremely helpful. It is commendable that parents and teachers make the compensation plan as it is rewarding and powerful tool, it increases motivation, and if foreign, but later when the child is capable of understanding the significance of learning to upgrade their future, it will be very awaken internal motivation. On the basis of the stated above, we conclude that it is best for the youth to be well educated and to have the correct information. Of course, that may have an important role of families and schools, as well as the two most important links in the growing and 3 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo maturing each individual. Talk openly about drugs does not mean to advocate drugs. The priority of our schools and families should be teaching young people a healthy lifestyle, reducing the interest of young people for substance abuse and drug abuse, and should be carried out as often as I pursue a variety of tasks through which young people develop mutual and good communication with teachers, parents and friends. References Babsssovic, M. (1987). Legal aspects of drug abuse prevention and nikotizma Titograd City. Backovic, A. (2003). Drug addiction. Belgrade: IP "Zarko Albulj". Bojanin, S. (2002). The role of schools in the primary prevention of youth delinquency and dependency, ECPD, internationally graduate school primary prevention of substance abuse, Proc. Bukelić, J. (2002). Drugs in the school bench. Belgrade. IP "Velarta." Kacapor, S., Vilotijevic, M. (2005). Family and school pedagogy, Belgrade: Teachers College. Korac, H. (2003). The role of families in preventing abuse. Novi Pazar: El Kelimeh. Mandic, P. (1975). Cooperation between home and school, Sarajevo light. Krulj, R., Kacapor, S., Kulić, R. (2002). Pedagogy. Belgrade: World Book. Potkonjak, N. (1980). Cooperation between families and schools. Sarajevo IGKRO, "Light." Vojic, J. (2003). Training of Trainers as a form of primary prevention, ECPD, internationally graduate school primary prevention of substance abuse, Proceedings, Belgrade. 4 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2332 Title A name given to the resource Correlation Effects of Family and School in Combating Resources and Drugs Author Author KARIŠIK, Fatima Abstract A summary of the resource. Alarming data about the number of young people who abuse drugs and drug clearly indicate the topicality of studying this subject. There is more meaning to this topic and also is socially important because the youth is the pillar of any society. Social significance is reflected in the fact that society has an important role in reducing substance abuse and drugs. Studying and developing cooperation with families and schools to fight substance abuse and drug use is very important for pedagogy as a science of education, especially for the families and school counselors. The situation as it is now in our society unambiguous and clearly shows that have already matured enough to form its own sub discipline pedagogical way to deal with the phenomenon of combating substance abuse and drugs. To achieve success in solving the problem of family and school cooperation has to be at a high level, it must be continuous with continuous exchange of views and ideas on solving it. Educational influences of family and school are a very powerful tool when it comes to the formation of a healthy personality and quality, which will be capable of resisting the most difficult types of voices. Until recently even in pedagogical circles, they supported the view that it is best not to talk about drugs in the school, because it was thought that people would be awakened and deepened curiosity. It is important to emphasize that this is a very wrong attitude; on the contrary we believe that children need to talk openly about it, both with their families and at school. Because the family and school environment conducive to the creation of a free individual, the freeing of his creative potential and self-confidence, we believe that an institution of vital importance to the individual and are essential for solving an instance of such a complex problem. Keywords: Family, School, Education, Drugs and Drug Community. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 H Social Sciences (General),HB Economic Theory,HG Finance,HJ Public Finance https://omeka.ibu.edu.ba/files/original/94d891fe63bcb145924616b09b31a983.pdf 1728c70dcf2ee734196724627dc216e0 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Correlation of Change in Fundamental Indicators and Stock Price Movements on Sarajevo Stock Exchange Enis Dzanic University of Bihac, Bosnia and Herzegovina enis.dzanic@bih.net.ba Fundamental analysis is regarded as one of the key tools in evaluating securities by examining intrinsic value of the business, trough primarily the analysis of its financial statements. Although in the short run, various factors might influence investment sentiment and thus stock price movements, in the long run fundamentals should determine stock price performance. Sarajevo Stock Exchange is a pioneering enterprise in the development of a capital market in Bosnian transition economy. Upon examining stock price movements and trade volumes over its ten year history, it is difficult to argue that high volatility in both factors can be attributed to changes in corporate fundamentals. We can thus argue that irrational or speculative determinants are at play; a discouraging prospect for a developing capital market. In order to investigate the correlation between the change in fundamental indicators and stock price movements, ten major companies listed on the exchange were selected using pre-defined criteria, and key fundamental indicators, as well as stock price volatility was examined for a five year period during which Sarajevo Stock Exchange had highest trade volumes. The results indicate that ratios that are price-independent have volatility ten times lower than ratios that are price-determined. Additionally, stock price analysis indicates high standard deviation; a traditionally accepted measure of volatility and intrayear stock price spreads often reach hundreds of percent. Furthermore, when selected indicators are correlated with stock price movements, the research determined that correlation coefficients are low, sometimes negative, suggesting no linear relationship between the change in fundamental indicators and the change in the price of the security. The result of high-risk high-volatility market situation was a significant decline in value of securities listed on the exchange. This decline led to a loss of confidence of individual investors in the exchange which can be illustrated by low trading volumes in the last few years, usually in the region of 1% to 3% of 2007 levels. The exchange thus is incapable of serving most of functions traditionally associated with the business. Keywords: Stock Price Volatility, Fundamental Analysis, Sarajevo Stock Exchange. 101 � https://omeka.ibu.edu.ba/files/original/25dec529bce68d83cbf2a4c8ff005d54.docx 331b359c8b86a59e15773f92f8bf300c https://omeka.ibu.edu.ba/files/original/8d28e06a6bbe074a38b64c5c545fd54a.pdf 7a2032150164b93e47e8c1071188d54a PDF Text Text International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Correlation of Change in FundamentalIndicators and Stock Price Movements on Sarajevo Stock Exchange EnisDzanic University of Bihac, Bosnia and Herzegovina enis.dzanic@bih.net.ba Abstract Fundamental analysis is regarded as one of the key tools in evaluating securities by examining intrinsic value of the business, trough primarily the analysis of its financial statements. Although in the short run, various factors might influence investment sentiment and thus stock price movements, in the long run fundamentals should determine stock price performance. Sarajevo Stock Exchange is a pioneering enterprise in the development of a capital market in Bosnian transition economy. Upon examining stock price movements and trade volumes over its ten year history, it is difficult to argue that high volatility in both factors can be attributed to changes in corporate fundamentals. We can thus argue that irrational or speculative determinants are at play; a discouraging prospect for a developing capital market. In order to investigate the correlation between the change in fundamental indicators and stock price movements, ten major companies listed on the exchange were selected using pre-defined criteria, and key fundamental indicators, as well as stock price volatility was examined for a five year period during which Sarajevo Stock Exchange had highest trade volumes. The results indicate that ratios that are price-independent have volatility ten times lower than ratios that are price-determined. Additionally, stock price analysis indicates high standard deviation; a traditionally accepted measure of volatility and intra-year stock price spreads often reach hundreds of percent. Furthermore, when selected indicators are correlated with stock price movements, the research determined that correlation coefficients are low, sometimes negative, suggesting no linear relationship between the change in fundamental indicators and the change in the price of the security. The result of high-risk high-volatility market situation was a significant decline in value of securities listed on the exchange. This decline led to a loss of confidence of individual investors in the exchange which can be illustrated by low trading volumes in the last few years, usually in the region of 1% to 3% of 2007 levels. The exchange thus is incapable of serving most of functions traditionally associated with the business. Keywords: Stock Price Volatility, Fundamental Analysis, Sarajevo Stock Exchange. Introduction Analysis of financial statements using fundamental analysis helps us determine intrinsic value of the business, and help us determine the value of stocks issued by publicly traded companies. In the short run, there might be a number of factors that influence supply and demand for a particular stock, however in the long run; fundamental indicators are a primary determinant of a market capitalization of a business, and thus its share price. Thus, some authors like Banz (1981) or Fama (1970) suggest that companies with low P/BV ratio (price to book value) achieved significantly better results compared to companies with high P/BV ratio. Their research indicates that companies in the bottom tenth of the P/BV ratios have outperformed on average by one percent per month in terms of stock price change, 180 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo companies that were in the top ten percentile of value of P/BV ratios. One explanation for this situation is that companies with high P/BV ratio were overpriced and thus provided little return on investment. Some research (Michaely et al., 1995) shows that although initial market reaction is slow, the market does react significantly to the company's earnings information as represented by some fundamental indicators such as EPS (earnings per share). Other authors have demonstrated that the use of fundamental analysis can be used to determine stock price movement in the future, and thus achieve extraordinary returns, significantly higher than market average. Thus Ou and Penman (1989) used multivariate analysis of financial ratios; and by using statistical tools derived a composite indicator that predicts a change in the company's earnings and thus the movement of its stock. Other authors reached similar conclusions (Lev and Thiagarajan, 1993), while Abarbanell and Bushy (1998) as well as Piotrski (2000) successfully determined which companies will have above average stock returns as well as those that will underperform the market, by using financial statements and fundamental indicators. The purpose of this paper is to examine whether stock price of companies quoted on Sarajevo Stock Exchange is truly determined by the performance of the issuers, or we have other stock price determinants, such as speculative trading, being the driving force behind the change in value of securities. This is a critical issue to examine since small and relatively new exchanges such as Sarajevo Stock Exchange (SASE), are particularly vulnerable, and in a country with underdeveloped investor protection mechanisms and infrastructure, might lead to a loss of confidence in capital markets, thus perverting the purpose of those markets in a first place and reducing them to a forum for secondary exchange of securities. Events after 2007 peaks on Sarajevo Stock Exchange, and in particular its low trading volume, suggest that this might be taking place at the time. Methodology In order to determine whether the performance of a business is reflected in the stock price change on Sarajevo Stock Exchange we will analyze financial reports of selected companies, determine fundamental indicators, and examine if there is a correlation between a change in fundamental indicators and corresponding share price traded on SASE. The following selection criteria were used to select 10 companies examined in this paper: corporate shares were traded during the entire period examined in the paper, that is from 2003 to 2008; during this period, shares were traded during at least 250 trading days; at least 10% of the total shared issued by the company changed owners during that period, excluding the initial registration of shares; the company was listed in year 2002; market capitalization is over KM 30,000,000.00 in 2008; the companies were registered at least five years prior to being listed on SASE. Using the above mentioned criteria, I selected the following 10 companies for the research sample: Bosnalijekdd, BH Telecom dd, Hidrogradnjadd, ElektroprivredaBiHdd, Elektroprivreda HZ HB dd, Klasdd, Vranicadd, Vispakdd, Šipad Commerce ddand BihaćkaPivovara dd. The selected companies are the leaders in their industry sector in Bosnia, significantly exceed the selection criteria, are well known and established in the region in various industries such as construction, telecommunications, food industry, timber industry and the energy sector. 181 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Fundamental indicators will be calculated, for a period from 2003 to 2008, as well as their mean, standard deviation and percentage deviation. The indicators will be divided in two groups, those that are share price independent and those that are share price dependent. The first group of ratios consists of ROE (return on equity), ROA (return on assets), BVPS (book value per share), EPS (Earnings per share) as well as asset (ATO) and equity turnover (ETO) ratios. The second group of indicators consists of MkCap (market capitalisation in absolute terms), P/Bv (price over book value, P/S (price over sales) and P/E (price over earnings) ratios. This will enable us to have a set of ratios whose percentage deviation should be correlated between two sets, if share price change is correlated with fundamental indicator change, that is with the corporate performance. The indicators will be indexed, with year 2003 being a base year with index 1. The next step is to calculate correlation index between a set of indicators and stock price change, in order to determine if there is a linear relationship between the change in fundamental indicators and share price change: High correlation index would suggest causal relationship between the stock price change and a change in fundamental ratios, which represent corporate performance. Results Since this analysis has generated a significant amount of data, which would consume significant amount of space, only relevant derived data will be presented. 182 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo P dependent P independent P dependent P independent P dependent P independent P dependent P independent Table 1: Indices of price dependent and price independent ratio change in a period of 2003-2008, with 2003 being a base year, for selected publicly traded companies on SASE ROE ROA BVPS EPS ETO ATO MkCa p Bosnalijekd.d. StDev Mean 0.088 0.953 0.106 0.831 0.165 1.234 0.136 1.170 0.060 1.067 0.081 0.930 % Dev 9.29% 12.73% 13.33% 11.65% 5.58% 8.73% BH Telecom d.d. StDev Mean 0.087 0.962 0.076 0.898 0.084 1.139 0.071 1.091 0.043 0.951 0.065 0.889 % Dev 9.00% 8.51% 7.36% 6.54% 4.57% 7.33% Vispakd.d. StDev Mean 0.784 -0.110 0.732 -0.082 0.020 0.979 0.769 -0.101 0.117 1.080 0.040 0.972 % Dev -712.52% -895.41% 1.99% -759.15% 10.80% 4.16% 3.030 4.692 64.59% 1.476 2.781 53.09% 2.107 3.420 61.62% P/Bv 1.996 3.443 57.96% 1.199 2.396 50.03% 2.210 3.519 62.82% P/S 1.937 3.231 59.94% 1.267 2.537 49.96% 1.817 3.194 56.88% P/E 2.320 3.717 62.41% 1.370 2.550 53.74% 23.269 15.642 148.76% ROE ROA BVPS EPS ETO ATO MkCa p JP ElektroprivredaBiHd.d. 0.896 -0.275 -326.05% 0.863 -0.274 -315.50% 0.049 0.924 5.33% 0.841 -0.283 -296.53% 0.317 1.374 23.04% 0.300 1.348 22.26% Elektorprivreda HZHB d.d. 0.629 -0.497 -126.65% 0.640 -0.514 -124.55% 0.253 1.236 20.50% 0.760 -0.627 -121.23% 0.227 1.227 18.49% 0.199 1.227 16.23% SipadKomercd.d. 62.823 -25.282 55.505 -22.079 93.295 86.254 49.764 -18.475 0.545 0.444 0.503 0.506 -248.49% -251.40% 108.16% -269.35% 122.61% 99.51% 1.540 2.174 70.84% 2.664 3.351 79.50% 6.249 5.843 106.94% P/Bv 1.812 2.424 74.75% 2.161 2.709 79.78% 1.070 0.864 123.82% P/S 1.102 1.684 65.47% 1.540 2.149 71.64% 6.131 6.874 89.19% P/E 15.053 8.494 177.22% 12.064 -1.752 -688.58% 2.813 2.740 102.65% Hidrogradnjad.d. 1.394 -0.343 2.195 -0.731 0.006 0.991 1.377 -0.337 0.192 0.695 0.240 0.945 -406.50% -300.36% 0.58% -409.14% 27.59% 25.43% BihackaPivovarad.d. 0.492 1.376 35.79% 0.597 1.449 41.19% 0.192 1.257 15.27% 0.773 1.752 44.11% 0.094 1.095 8.55% 0.099 1.140 8.71% Vranicad.d. 29.729 -10.014 41.478 -13.905 1.047 1.942 73.219 -26.027 0.423 0.785 0.313 0.962 -296.88% -298.30% 53.92% -281.32% 53.88% 32.50% ROE ROA BVPS EPS ETO ATO MkCa p 2.184 2.870 76.09% 0.977 2.212 44.19% 10.569 8.457 124.97% P/Bv 2.212 2.901 76.24% 0.552 1.703 32.40% 3.243 3.316 97.78% P/S 4.545 5.006 90.79% 0.592 1.576 37.60% 8.831 7.062 125.05% P/E 9.394 7.546 124.49% 0.507 1.310 38.71% 1.358 1.141 119.05% Klasd.d. 0.409 0.404 0.025 0.418 0.113 0.103 0.486 0.448 1.020 0.497 1.091 0.927 84.09% 90.29% 2.46% 84.08% 10.38% 11.13% ROE ROA BVPS EPS ETO ATO MkCa p 0.839 1.900 44.17% P/Bv 0.785 1.854 42.36% P/S 0.681 1.696 40.17% P/E 7.215 7.992 90.28% 183 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Correl Net income 0.552 ATO -0.604 ROE -0.493 ROA -0.774 Net income ATO ROE 0.072 -0.311 -0.517 ROA Net income ATO ROE ROA 0.426 Net income ATO ROE -0.428 0.466 -0.408 ROA -0.414 Net income 0.254 ATO -0.684 ROE 0.255 ROA 0.297 BihackaPivovarad. d. Correl Net income 0.474 ATO -0.132 ROE 0.254 ROA 0.266 Net income ATO ROE -0.363 -0.319 -0.380 -0.653 ROA -0.445 0.434 0.325 0.419 Vranicad.d. Ratio Net income ATO ROE -0.226 -0.552 -0.248 ROA -0.230 Net income ATO ROE -0.332 0.201 -0.326 ROA -0.348 Net income 0.296 ATO -0.696 ROE 0.284 ROA 0.283 Klasd.d. Ratio SipadKomercd Vispakd.d. .d. JP JP Hidrogradnja BH Telecom Elektroprivred Elektroprivred d. d. d.d. a HZHB d.d. aBiHd.d. Bosnalijekd.d. Table 2: Correlation between selected fundamental indicators and stock price change for a period of 2003-2008 Discussion In the observed time period, six out of ten companies observed in this study, suffered net loss for the period of 2003-2008, which was covered by the reduction in the capital. Yet at the same time corporate share prices have risen dramatically, with mean value for the period ranging between 190% of the index year mean price (year 2003) up to 846% for a company Vranicad.d., as an example. Other companies enjoyed similar growth in share value, and the growth was most notable in 2005 – 2007 period, despite poor and declining fundamentals. Only BihackaPivovarad.d. demonstrated same level of change of price dependent vs. price independent ratios; in the case of this company, corporate performance parameters grew proportionally to the share price, and this is a rare case of share price growth substantiated by the growth in corporate intrinsic value. Volatility of the market at the time was very high. Previous research by author (Dzanic et al., 2010) indicated that volatility of SASE index SASX-10 was about ten times larger than Dow Jones Industrial Average. At the same time, correlation between those two indices was -0.38474, and SASE-10 index grew by 57% in the first half of the year. This is an indication of relative independence of SASE from major capital markets, when those markets are relatively stable. With the onset of 2007 recession, volatility increased in the United States, and capital markets started to mount losses. In 2007-2008 and with increasing volatility and losses in the US capital markets, SASE quoted shares started to lose value, especially in 2008. During that year, correlation between SASE and NYSE indices was 0.84775 in sharp contrast to 2005, which is an indication of a crisis spillover effect, as demonstrated by other authors(Longin and Solnik 2001), in other emerging markets (King and Wadhwani 1990). 184 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo In terms of correlation of share price with fundamental indicators, seven out of ten companies had correlation coefficient for net income in a range less than 0.4, indicating no linear relationship between share price movement and change in corporate earnings. One company even had a strong negative correlation coefficient for net earnings (Elekroprivreda HZHB) indicating that as earnings dropped over the period, and the company netted a loss, share price war growing. The results of the research suggest that fundamental indicators are not a driving force behind a change in share price of companies quoted on SASE, as demonstrated in seven out of ten companies examined in this study. Only one company had magnitude of change of fundamental indicators correlated to share price performance, while the other two demonstrated direction, and not necessarily the magnitude. Conclusion The research determined that fundamentals do not determine share price in the examined period. We can thus argue that irrational or speculative determinants are at play; a discouraging prospect for a developing capital market. The result of high-risk highvolatility market situation was a significant decline in value of securities listed on the exchange. This decline led to a loss of confidence of individual investors in the exchange which can be illustrated by low trading volumes in the last few years, usually in the region of 1% to 3% of 2007 levels. The exchange thus is incapable of serving most of functions traditionally associated with the business. In order to discourage speculative activities, authorities must learn to cope with the problem and legislation as well as oversight has to be improved, if confidence is to return to the Sarajevo Stock Exchange, together with the lost trading volumes. References Abarbanell, J. &Bushee, B.(1998). Abnormal returns to a fundamental analysis strategy. The Accounting Review73, 19-45 Banz, R.(1981). The relationship between return and market value of common stocks.Journal of Financial Economics 9, 3-18 Džanić E., Grozdanić E., Đug D. SvjetskaberzanskakretanjakaodeterminantakretanjanaSarajevskojberzi. PerspektiveekonomskograzvojaBiH (2010) Fama, E. F. (1970) Efficient capital market:A review of theory and emprical work. Journal of finance 25, No. 2. King M. A. &Wadhwani, S. (1990) Transmission of volatility between stock markets. The Review of Financial Studies 3/1, Lev, B. &Thiagarajan, R.(1993). Fundamental information analysis.Journal of Accounting Research 31, 190-215 185 �International Conference on EconomicandSocialStudies (ICESoS’13), 10-11 May, 2013, Sarajevo Longin, F. M. &Solnik B.(2001) Extreme correlations of international equity markets during extremely volatile periods. Journal of Finance 56, Michaely, R., Thaler, R., Womack, K. (1995) Price reactions to dividend initiations and omissions: overreaction or drift. Journal of Finance 50, 997-997 Ou, J., Penman, S.(1989) Financial statement analysis and the prediction of stock returns. Journal of Accounting & Economics 11, 295-329 Piotroski, J. (2000) Value investing: The use of historical financial statement information to separate winners from losers.Journal of Accounting Research 186 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1512 Title A name given to the resource Correlation of Change in Fundamental Indicators and Stock Price Movements on Sarajevo Stock Exchange Author Author DŽANIĆ, Enis Abstract A summary of the resource. Fundamental analysis is regarded as one of the key tools in evaluating securities by examining intrinsic value of the business, trough primarily the analysis of its financial statements. Although in the short run, various factors might influence investment sentiment and thus stock price movements, in the long run fundamentals should determine stock price performance. Sarajevo Stock Exchange is a pioneering enterprise in the development of a capital market in Bosnian transition economy. Upon examining stock price movements and trade volumes over its ten year history, it is difficult to argue that high volatility in both factors can be attributed to changes in corporate fundamentals. We can thus argue that irrational or speculative determinants are at play; a discouraging prospect for a developing capital market. In order to investigate the correlation between the change in fundamental indicators and stock price movements, ten major companies listed on the exchange were selected using pre-defined criteria, and key fundamental indicators, as well as stock price volatility was examined for a five year period during which Sarajevo Stock Exchange had highest trade volumes. The results indicate that ratios that are price-independent have volatility ten times lower than ratios that are price-determined. Additionally, stock price analysis indicates high standard deviation; a traditionally accepted measure of volatility and intrayear stock price spreads often reach hundreds of percent. Furthermore, when selected indicators are correlated with stock price movements, the research determined that correlation coefficients are low, sometimes negative, suggesting no linear relationship between the change in fundamental indicators and the change in the price of the security. The result of high-risk high-volatility market situation was a significant decline in value of securities listed on the exchange. This decline led to a loss of confidence of individual investors in the exchange which can be illustrated by low trading volumes in the last few years, usually in the region of 1% to 3% of 2007 levels. The exchange thus is incapable of serving most of functions traditionally associated with the business. Keywords: Stock Price Volatility, Fundamental Analysis, Sarajevo Stock Exchange. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3