Corporate Governance and Ownership Concentration on the Budapest Stock Exchange

Abstract

The importance of good corporate governance has only recently been recognized in Hungary and efforts to implement modern structures have been slow. Moreover, it has been an ‘imported product,’ not a result of endogenous evolution. The lack of organic development in Hungary is understandable given the history of central planning up to 1990. During the subsequent ten-year transition period all the essential features of a well-functioning market economy were established. Notwithstanding this, strong corporate governance was treated as a low priority ingredient in the newly created capitalist institutions. The updated Company Law contained the necessary prescriptions for the formal corporate governance structures but for closely held private Hungarian companies — the dominant form of those domestically owned — the structures remain more or less an empty shell.