Improving the mechanisms of corporate governance of an enterprise

Abstract

This paper examines the current state and directions for improving an enterprise’s corporate governance mechanisms as a decisive prerequisite for enhancing investment attractiveness, transparency, and long-term competitiveness amid the structural transformation of the national economy and the harmonization of Ukrainian corporate legislation with European Union law. It is argued that corporate governance should be viewed not as a set of formal procedures for interaction among a company’s governing bodies, but as an integral system of checks and balances whose effectiveness depends on the coordinated operation of internal and external control mechanisms over management in the interests of shareholders and other stakeholders. Four levels of maturity of an enterprise’s corporate governance system are systematized – basic, regulated, balanced, and strategically integrated – together with their characteristic managerial practices, an indicative maturity index, and typical constraints associated with each level. A comparative analysis of three classical models of corporate governance is conducted – the Anglo-American, the continental European (German), and the insider (transitional) model characteristic of most Ukrainian enterprises – by ownership structure, the role of the supervisory body, and the predominant control mechanism. The toolkit for improving corporate governance is classified into two groups – internal mechanisms (supervisory board structure and independence, board committees, internal control and audit systems, remuneration policy) and external mechanisms (information disclosure, external audit, the market for corporate control, regulatory oversight) – with their functions, implementation mechanisms, and conditions for effectiveness. The study identifies key constraints on improving corporate governance at Ukrainian enterprises: concentrated ownership structures, the formal nature of supervisory board activity, insufficient information disclosure, and a weak market for corporate control. The study substantiates directions for enhancing the effectiveness of corporate governance, including strengthening the independence of supervisory boards, developing audit and remuneration committees, and adapting the disclosure system to the requirements of the Law of Ukraine “On Joint Stock Companies” and the G20/OECD Principles. Enterprise management and owners can use the findings to design corporate governance improvement programs. Keywords: corporate governance, governance mechanisms, supervisory board, joint stock company, transparency, information disclosure, corporate governance maturity, corporate governance model, enterprise competitiveness, European integration.