246
www.amazoniainvestiga.info ISSN 2322- 6307
DOI: https://doi.org/10.34069/AI/2023.65.05.23
How to Cite:
Hurman , O., Kostenko, D., Runcheva, N., Bocharova, N., & Khytrova, O. (2023). Corporate management in the economic sphere
under martial law: a response to the challenges of the times. Amazonia Investiga, 12(65), 246-255.
https://doi.org/10.34069/AI/2023.65.05.23
Corporate management in the economic sphere under martial law:
a response to the challenges of the times
La gestión empresarial en el ámbito económico bajo la ley marcial: una respuesta a los
retos de la época
Received: January 25, 2023 Accepted: May 20, 2023
Written by:
Olena Hurman1
https://orcid.org/0000-0001-9415-2635
Dmytro Kostenko2
https://orcid.org/0000-0002-4030-2287
Nataliia Runcheva3
https://orcid.org/0000-0001-8645-9821
Nadiia Bocharova4
https://orcid.org/0000-0003-4371-0187
Olha Khytrova5
https://orcid.org/0000-0003-2253-4356
Abstract
The relevance of the research lies in the fact that
at the current stage in Ukraine, a national concept
of corporate governance is being formed,
however, this process is complicated by political,
social, and economic restrictions provided by the
martial law introduced in our country. The
purpose of the research is to study the structure,
features, and characteristics of corporate
management strategies. In accordance with the
set goal, the task of the research is to analyze the
main trends in the development of corporate
management at the current stage, to highlight
their features. When conducting the research,
general and special methods of scientific
knowledge were used. The result of the study is
the argumentation of the position that corporate
management is a separate type of relationship in
a business company, the features of which are
determined by the specifics of the corporation,
and management is a narrower concept, since it
1
Ph.D. in Pedagogy, Associate Professor of the Department of Marketing and Management, Khmelnytsky Cooperative Trade and
Economy Institute, Ukraine.
2
Ph.D. in Pedagogy, Doctor of Philosophy in Public Administrat, Assistant of the Department of foreign languages of mathematical
faculties Educational and Scientific Institute of Philology of Taras Shevchenko National University of Kyiv, assistant professor of the
Language Training Department Institute of Public Administration and Scientific Research on Civil Defense, doctoral student Institute
of Problems on Education National Academy of Pedagogical Sciences of Ukraine, Ukraine.
3
Doctor of Economics, Associate Professor Mathematics and Economics, Faculty of Information Technology, Bogdan Khmelnytskyi
Melitopol State Pedagogical University, Ukraine.
4
Candidate of Economic Sciences (PhD), Associate Professor Department of management, Faculty of Management and Business
Kharkiv National Automobile and Highway University, Ukraine.
5
Candidate of Economic Sciences, Associate Professor, Department of Management, International Economics and Tourism,
Chernivtsi Trade and Economic Institute Kyiv National University of Trade and Economics, Ukraine.
Hurman , O., Kostenko, D., Runcheva, N., Bocharova, N., Khytrova, O. / Volume 12 - Issue 65: 246-255 / May, 2023
Volume 12 - Issue 65
/ May 2023
247
http:// www.amazoniainvestiga.info ISSN 2322- 6307
is implemented exclusively by the company's
management (the top management), and
corporate management is carried out by all
governing bodies companies (shareholders,
board of directors, CEO, and management).
Corporate governance is mainly strategic in
nature and oriented towards the successful
functioning of the business company in the
external environment.
Keywords: strategy, owners, capital, joint stock
company, management.
Introduction
At the current stage, it is important to develop
corporate governance models at all levels of
development dynamics. The economy not only in
Ukraine but also in other countries requires a
completely new approach to it. The essence of
corporate governance is the implementation of
the corporate governance cycle to achieve
maximum efficiency of the corporation, which is
its main criterion. The economic and managerial
categories of “corporation” and “corporate
governance” have become more widely used in
scientific research and literature, gradually
shaping the idea of the management system
adopted by corporations as one of the most
important ways of effective management in the
conduct of business activities. However, there is
no single agreed position on the interpretation of
the essence of corporate governance, and the
problems of the institutional structure, principles
and trends of corporate governance development
are not sufficiently covered. In addition,
Ukrainian enterprises, institutions and
organizations are facing the challenge of
developing a system of relations between
company managers and their owners, aimed at
ensuring the efficiency of the company's
activities and taking into account the interests of
owners and other stakeholders. Corporate
governance is a system of organizational,
economic, legal and managerial relations
between economic entities whose interests are
related to the company's activities. The main
factors that significantly affect the efficiency of
the company's activities and lead to the
emergence of additional competitive advantages
include the mechanisms for making
organizational and managerial decisions and
taking appropriate measures to implement them.
Corporate governance as a process of making
management decisions, organizing their
implementation, controlling their
implementation and evaluating the results
achieved includes determining the main goal,
means and methods of its achievement.
Poor corporate governance practices have a
negative impact on investment performance and
contribute to larger systemic problems at the
national and regional level. Good corporate
governance practices ensure that companies take
into account the interests of a wide range of
stakeholders and that their management is
accountable to the company and its shareholders.
This, in turn, helps maintain investor confidence
and attracts longer-term capital. Therefore, the
main goal of effective corporate governance is to
increase the confidence of potential investors in
the mechanisms for attracting investments in
companies and, on this basis, to increase the
capitalization of enterprises, institutions and
organizations in Ukraine, and, accordingly, the
Ukrainian economy as a whole.
The main condition for achieving the above goal,
increasing the efficiency and further
development of corporate governance in Ukraine
is full accounting, analysis and ensuring the
optimal combination and satisfaction of the
interests of economic relations - companies. The
system of corporate relations determines not only
the amount of current dividends paid to
shareholders and the current level of the
company's share price, but also the prospects for
its long-term development, the possibility of
attracting additional investments from both
internal and external sources, the degree of
positive impact of each particular company's
activities on the country's economy as a whole,
and the overall efficiency of the use of attracted
financial resources. Thus, the state of corporate
governance is a very important integral indicator
characterizing the state of the country's
investment process, as well as a relevant area for
scientific research, which led to the choice of the
research topic.
248
www.amazoniainvestiga.info ISSN 2322- 6307
It is believed that the term “corporate
governance” appears simultaneously with the
emergence of such an organizational and legal
form of entrepreneurial activity as a corporation.
The motivation of the owner determines the
financial interest and/or the opportunity to
participate in management. The corporation is
regarded as an artificial entity that exists only by
law, the ownership is represented by shares in the
capital. In this case, the focus is on the legal
component of the functioning of the corporation,
which includes a set of formed enterprises as a
peculiar system of participation. We are talking
here about the process of multistage
subordination of some enterprises to others based
on participation in the share capital. This
approach is very close, in essence, to the
definition of the corporation provided by the
legislation of Ukraine, but in this case, it should
be noted that such an interpretation seems
acceptable only under those conditions if we
consider the corporation exclusively as an
integrated structure. However, this situation is
not widespread in the implementation of business
activities by business companies. In addition, it
should be noted and the fact that we can often
observe the identification of the concepts of
“association of businesses” and “pooling of
capital of owners of the enterprise”, which is
unacceptable from the perspective of the
economic content of these categories.
At the present stage, there is no clear definition
of the basic concepts of corporate relations in
Ukraine, which negatively affects the processes
of forming a national system of corporate
governance, as well as in the practical economic
activity of enterprises under martial law.
At the present stage, Ukraine is in a state of
military conflict, which significantly affects all
spheres of state activity, including the economic
one. Accordingly, it is necessary to identify the
main tasks for the formation of effective
corporate governance and to develop a model of
an effective corporate governance method in the
context of economic instability caused by the
consequences of armed aggression against
Ukraine. Thus, in Ukraine today, the issue of
improving the corporate governance system is
relevant and important from the point of view of
both science and practice. Corporate governance
under martial law requires the creation and use of
a method of complex influence in order to ensure
the most stable growth of the value of companies.
Theoretical Framework or Literature Review
Among the domestic scientists who carried out
scientific searches on corporate management, it
is necessary to note Ya. Tsekhmister, who
highlighted the key problems of educational
management, namely: practical activities of the
manager, implementation of innovations; the
process of training professionals; monitoring the
effectiveness and quality assessment of
educational management (Tsekhmister et al.,
2022, p. 556). Indeed, the training of high-level
professionals with relevant professional
competencies for the implementation of
corporate management is extremely important,
especially in the conditions of martial law
implemented in Ukraine. As P. Gorinov notes in
his study, the military aggression of the Kremlin
regime against Ukraine, the annexation of
Crimea by pro-Russian separatists in Donbas had
a great impact on legal science. Thus, the
scientist focuses on the fact that the
demilitarization of Ukrainian legal opinion took
place as a result of general reforms of the
Ukrainian legal industry (Gorinov & Mereniuk,
2022, p. 18). Under martial law imposed in
Ukraine, it is important to study the regulation
and protection of human rights of the fourth
generation, as well as the definition of the
essence and purpose of these rights, the
participation of international organizations is
equally important, which is highlighted in his
research study by A. Sapiński (Sapiński, 2022,
p. 14). M. Latynin in his scientific work
accentuates the importance of scientific research
in the sphere of economic science, he notes that
their relevance is determined by the fact that the
initiated structural reforms in Ukraine put
forward new requirements for public
administration in the economic sphere (Latynin
et al., 2021, p. 1). N. Botvina notes in his study
that the state of deepening processes of
privatization and development of
entrepreneurship, the expansion of the
infrastructure of market relations necessitate
further improvement of credit and monetary
relations, as well as mechanisms of corporate
governance (Botvina, 2018, p. 115). A. Holovach
notes that Ukraine is trying to overcome the
negative trends of the economic crisis
concerning, among other things, corporate
governance by carrying out reforms and adopting
appropriate EU accession strategies (Holovach &
Pryputen, 2019, p. 92). According to, S. Sliusar,
at the current stage of Ukraine's development,
support for the establishment and development of
entrepreneurship is one of the defining priorities
of state policy from the first years of economic
reforms (Sliusar, 2019, 206). However, under the
Volume 12 - Issue 65
/ May 2023
249
http:// www.amazoniainvestiga.info ISSN 2322- 6307
conditions of the introduced martial law in
Ukraine, the reforms in the economic and social
spheres are suspended, respectively, and the
formation of the national concept of corporate
governance is at the stage of postponement. In
the aspect of the study of corporate governance it
is important to study the organizational culture of
enterprises, so, N. Rynkevich to the barriers,
impeding the effective development of the
organizational culture of enterprises, refers to the
following: functional failures prevent the
exchange of data; lack of digital platforms to
manage large databases; lack of digital
competence of personnel; lack of a clearly
formulated definition of customer focus; lack of
understanding of the essence of the customer
focus approach to the formation of organizational
culture; the inability of the company to
communicate with customers (Rynkevich, 2020,
p. 123).
As for the study of strategies in foreign countries,
it is necessary to note the scientific work of J.
Belas, whose search resulted in the substantiation
of the position that large companies, old
companies, and entrepreneurs with higher
education apply a participative style of corporate
management (Belas et al., 2020, p. 119).
M. Menz, using firm theory as a lens for
interpreting corporate governance, focuses his
scholarly analysis on the implications of the
evolving digital age for three broad areas of
corporate strategy: (1) corporate (competitive)
advantage, (2) firm scale, scope and boundaries,
and (3) internal structure and design (Menz et al.,
2021, p. 1695). D. Chatzoudes devotes attention
in his scholarly study of corporate governance to
the issue of human resources, specifically noting
that effective firm performance depends on
favorable working relationships, a good
organizational climate, and well-planned human
resource management practices (Chatzoudes &
Chatzoglou, 2022, p. 49). D. Asensio-López
emphasizes in his research study that innovation
efforts and enterprise performance depend on
factors influenced by corporate governance, such
as ownership structure or board functioning
(Asensio-López, Cabeza-García, &
González-Álvarez, 2019, p. 266). A. Veh notes
in his scholarly work that corporate reputation
has occupied an important place in management
research since the 1990s (Veh, Göbel & Vogel,
2018, p. 315). Tiep Le & Nguyen devoted his
scholarly research to investigate the impact of
corporate governance on firm value, firm
earnings, the mediation mechanism of corporate
social responsibility, and organizational
identification in the relationship between
corporate governance and its importance in the
enterprise (Tiep Le & Nguyen, 2022, p. 1).
M. Petrin, in an academic study, argues that the
next generation of artificial intelligence will be
able to take over the management of business
organizations and examines the implications of
this development for corporate law and
governance (Petrin, 2019, p. 1).
Based on the analysis, it can be argued that in
Ukraine, in addition to the negative impact of the
consequences of martial law, the development of
corporate governance is hampered by
unfavorable government policies. For example, it
is not profitable to increase transparency, as open
information makes a company (corporation)
more vulnerable to law enforcement and
controlling authorities. It can be argued that an
“insider model of corporate governance” has
emerged in Ukraine, which involves the
realization of the interests of existing
shareholders who dominate, as well as losses for
investors. Currently, Ukrainian corporate
governance has the following negative features:
1) merger of ownership and management
functions, with enterprises that are public
corporations continuing to be managed as
private firms;
2) a weak mechanism of control over
management activities. Managers are
accountable only to the dominant
shareholder and are often affiliated with it;
3) distribution of profits through non-dividend
channels. In this case, not all shareholders
receive profits, only the dominant ones (e.g.,
through transfer prices or various financial
schemes);
4) difficult access to information on the
financial condition, low transparency of
companies (corporations), concealment of
real owners, affiliations
5) frequent use of illegal methods (e.g., asset
diversion, dilution of shareholdings, seizure
of shares, non-admission to shareholders'
meetings, etc.).
Methodology
When conducting research, we used general
methods (induction, deduction, synthesis,
analysis), as well as special methods
(comparison, prediction) methods of scientific
knowledge.
The general methods of scientific research were
used to clarify the nature of corporate
governance, its strategies, and the peculiarities of
functioning under the conditions of martial law
introduced in Ukraine. Using general research
250
www.amazoniainvestiga.info ISSN 2322- 6307
methods, it was concluded that there is currently
a tendency to base an enterprise in a complex
system of interconnections of projects and
processes, so the introduction of innovations in
management processes is a necessary measure
for business survival in a competitive and
unstable environment caused by the negative
effects of martial law. The use of general
research methods has made it possible to find out
that a special role should be given to streamlining
and optimizing existing business processes,
taking into account the requirements of
implemented projects, and the process-
innovative mechanism for managing business
processes is an integral part of the innovative
development of an enterprise. The use of general
research methods has confirmed the assumption
that this mechanism should be implemented as
part of the design process, which begins with
setting tasks, identifying the main goals and
opportunities for implementing the principle of
balance in the business process management
system. By using general methods, the author has
found that a characteristic feature of production
resources is flexibility, and this factor indicates
that there is a possibility of reorienting the
production process from the production of one
type of product to the production of an improved
one, even if the new product requires the use of
other raw materials, which is relevant in the
context of the martial law in Ukraine, and, as a
result, disruption of numerous production,
technological and logistics processes. The use of
general research methods has confirmed the
assumption that the requirement for a high level
of flexibility of enterprises under martial law is
the most relevant, as well as in times of market
instability, a sharp drop and increase in supply
and demand, as well as an increase in the pace of
scientific and technological progress in industrial
production. Using general research methods, the
author has found that the success of a company
can be influenced by such factors of the external
macro environment that, as a rule, cannot be
influenced by the company:
1. political environment - the unstable political
situation in Ukraine amid the ongoing
military conflict has a negative impact on all
areas of business and prevents long-term
strategic forecasts;
2. economic environment - recently,
purchasing power has significantly
decreased due to rising inflation in the
context of martial law in Ukraine, which also
negatively affects the operations of
enterprises;
3. social environment - in the current economic
situation under martial law in Ukraine, most
young professionals are looking for sources
of income abroad, which in turn causes the
aging of personnel and the inability to
introduce new technologies due to the lack
of highly qualified specialists, which
provokes high staff turnover and relatively
low wages in the industries;
4. cultural environment - Ukraine has a well-
developed organizational culture, and there
is a tendency to hold mass cultural and
entertainment events. However, in the
context of martial law in Ukraine, the desire
of citizens to obtain higher education is
declining;
5. scientific and technological environment -
new technologies are being introduced every
year to improve product quality and labor
productivity, but under martial law, these
processes have slowed down and decreased;
6. ecological environment - people tend to buy
products made from environmentally
friendly raw materials, even under martial
law in Ukraine.
Taking into account these factors, it is worth
noting that the macro environment has a
significant impact on both the activities of
enterprises and the strategy for developing a set
of measures to eliminate threats.
By using special research methods, the following
points were argued:
1. in the context of martial law in Ukraine, it is
necessary to conduct the most thorough
analysis of the company's strengths and
weaknesses, the main purpose of which is to
identify financial risks and improve
management efficiency. A full assessment of
the company's resources, business
processes, and competitiveness is necessary;
2. in the context of martial law in Ukraine, the
key factors of analysis are as follows:
− management - includes control over material
and human resources, assesses the potential
of employees, their qualifications,
motivation, loyalty, and interaction to
achieve the goals aimed at achieving the
company's main objectives;
− marketing - the main goal of marketing is to
create the most attractive product for
consumers, through advertising, personal
sales, or PR, which can then bring maximum
profit;
− staff is one of the main strategic resources of
the company, as its competence, level of
qualification, and personal interest are
Volume 12 - Issue 65
/ May 2023
251
http:// www.amazoniainvestiga.info ISSN 2322- 6307
directly related to the achievement of the
goal;
− analysis of the sales system allows to
estimate the planned sales volume, draw up
a scheme of sales channels, compare and
equalize the percentage of supply and
demand, distribute sales volume, etc.;
− product portfolio analysis shows the
prospects of goods and services in the
market, current and expected sales volumes,
relative market share, as well as the
profitability of the product group and each
product separately;
− competitive analysis allows you to identify
your main competitors, analyze their
strengths and weaknesses, and use this data
to improve your business strategy by
changing your products and services to meet
market demands;
− pricing policy is a set of measures and
strategies used by a corporation to win and
retain markets. Thanks to price elasticity, it
is possible to choose the most acceptable
prices for the company's goods, focusing on
competitors' prices and sales promotion
programs.
Results and Discussion
The processes of privatization of state and
municipal property, which continue since 1992,
are important for the economy of Ukraine
because thanks to them citizens had the
opportunity to become owners and to realize their
economic rights in full. The thus formed
enterprises of private form have passed the
period of adaptation to new economic conditions,
decided on the main directions of their
development, and intensified the search for
financial resources to implement their strategic
plans.
However, certain economic difficulties of the
modern period of development of the national
economic system, such as the state budget deficit,
inflation, caused by the challenges of martial law,
are obvious. Despite the objective obstacles, the
introduction of an effective system of corporate
governance is crucial for the further development
of the industrial and financial sectors of the
Ukrainian economy. Accordingly, it seems
reasonable to assert that the process of formation
of the national model of corporate governance
takes place under martial law.
The level of development of corporate
governance in our country is not high enough,
which can be explained by the peculiarities of the
Ukrainian joint-stock capital, formed as a result
of the distribution of small blocks of shares of
privatized enterprises among a large number of
shareholders - individuals. An important specific
feature of joint-stock companies in Ukraine is the
“close” relationship between the management of
companies and owners of large blocks of shares,
who, in fact, completely control the company. As
a result of this shareholding structure, major
shareholders are focused not on increasing their
income from the company's shares or increasing
its capitalization, but on maintaining their
existing relationship with the company. This
situation persists even under martial law. Not all
shareholders receive profits, but only the
dominant owners (due to different financial
schemes, for example, with the help of transfer
prices). The result of this is the absence of
dividend payments and the gradual buying up of
shares for a token payment.
Based on all the above and taking into account
the existing practice in the real sector of the
economy it is advisable to identify those criteria
that characterize a corporation as an economic
category: clear delimitation of ownership rights;
clear definition of the owners' responsibility for
the results of financial and economic activities of
the corporation; limitation of owners' liability;
legal entity status; centralized management of
corporate activities of the entire structure; the
possibility of free transfer of ownership rights.
In Ukraine, the above criteria are fully met only
two types of business entities, joint stock
companies, and limited liability companies. It
seems appropriate to distinguish the application
of the two essentially close concepts
“corporation” and “corporate structure” since
international experience shows that in most
countries with developed market economies, the
corporation is synonymous to the joint-stock
company. In such circumstances, referring
limited liability companies to the category
“corporation” will create some confusion in
definitions, but the introduction of the category
“corporate structure” will solve the problem
outlined. Clear terminology is important for the
legal regulation of corporate business companies,
especially under difficult conditions of martial
law, in order to ensure their full functioning and
implementation of their objectives.
The concept of “corporate structure” is broader
and referring both joint-stock companies and
limited liability companies to it seems quite
logical and reasonable. We can also conclude
that a corporation is a joint-stock company in
which, based on the centralization of capital and
savings of individuals and legal entities,
252
www.amazoniainvestiga.info ISSN 2322- 6307
collective appropriation of the results of
production activities is realized depending on the
number of shares received for the contributed
funds.
There are certain contradictions regarding the
definition of “corporate governance”. It is
defined as combining the norms of legislation,
regulations, and business practices in the private
sector, which allows business communities to
attract financial and human resources, effectively
carry out business activities and thus continue
their functioning, accumulate long-term
economic value by increasing share prices and
respecting the interests of all persons involved in
the implementation and management of
economic activities, as well as society as a whole.
“Corporate governance” can be viewed from the
perspective of those unities of conditions and
rules of an organizational, economic, and legal
nature that ensure the functioning of the
corporation. However, it is obvious that these
definitions are dominated by the legal rather than
economic aspect, as well as the fact that the
institutional approach to it is narrow, as it defines
corporate governance as a system of specific
relations arising between the bodies of the
company and its owners (shareholders) to
manage its activities of the company. The
management process involves such relationships
as arise when owners invest their capitals in the
enterprise and delegate a number of powers to
manage and dispose of their property to the
management apparatus of the corporation
(Boards of Directors and relevant competent
managers). This process does not presuppose
knowledge, skills, and abilities in the
management of the corporation, nor in the
mechanism of surplus value production by the
corporation (production technology, pricing
processes, etc.). However, owners have the right
to demand from the management of the
company, on the one hand, complete, truthful,
and comprehensive information on the results of
the use of their combined capital, on the other
hand, the performance of the original task of
investment - receiving income in the form of
dividend payments (or, alternatively, growth in
the exchange value of securities of the
corporation and receiving income in the form of
exchange rate differences from the sale of shares
on the stock market).
It is clear that members of the Board of Directors
and management representatives of a company
do not produce surplus value, but through the
exercise of their official duties on a professional
basis, contribute to its creation and
maximization. They are not usually the owners of
the corporation; they are entrusted with their
capitals by individuals and companies. The
manager also does not need to know the
technological and technical features of the
production process, but he must have
comprehensive primary information for
management decisions and ensure the continuity
of the reproduction process. Given the specifics
of privatization processes in Ukraine, it should be
noted that the employees and employees of the
corporation in most cases are also not the owners
of the enterprise itself, do not have the
competence to manage the corporation and the
ability to implement it, but it is they who create
additional value.
Thus, it seems possible to distinguish two types
of relationships that develop between the
subjects of the corporation: relationships and
information flows that arise between the
management of the corporation and the labor
collective, as well as relationships and
information flows that arise between the owners
and the management of the corporation. In the
first case, we are talking about financial
management, which is of interest from the
position of managing the activities of the
enterprise but is not corporate management. In
the second case, there is a situation where the
owners do not manage their property and can
only assess the performance of the corporation by
the information received from the managers or by
the level of dividends paid and the price of shares
on the securities market. Thus, managers are a
kind of intermediary between the owner and the
property, and when this process is carried out, a
system of economic and legal relations that are
the foundation of corporate governance emerges.
However, it is necessary to also note that by the
introduction of martial law in Ukraine the
tendency to include interested persons (the state,
municipal self-government bodies, trade unions,
the population of the territory in which the
enterprise is located) into this system was
widespread.
Consequently, corporate governance is a
complex of relationships between the
management of the corporation, the board of
directors, shareholders, and other stakeholders
(stakeholders - trade unions, the state,
consumers, etc.) to manage the activities of the
corporation to achieve its strategic objectives.
Obviously, with the increasing number of
participants pooling their capital the degree of
their participation in the management of the
corporation is reduced, and the process of
management decision-making becomes similar
to the democratic mechanism in political and
Volume 12 - Issue 65
/ May 2023
253
http:// www.amazoniainvestiga.info ISSN 2322- 6307
social life. That is, there is a need to create
specialized management bodies, such as a
supervisory board, management board, auditing
committee. In joint-stock companies the function
of the implementation of its activities is separated
from the ownership of capital, respectively, labor
will also be separated from the ownership of the
means of production and the additional product.
The economic category “corporate money” is
used in the implementation of practical activities
of business companies, but it is identified with
the concept of “finance of companies” from the
position of the provisions of economic theory.
The basic directions of financial flows of the
corporation are: investment of capitals and
savings of owners, reception of credits and loans,
state financing (subventions), financing of
production costs, investment of funds in
corporate rights, payment of dividends,
repayment of credits and loans, payment of
interest on them, taxes, fees, and other obligatory
payments, proceeds from the sale of production
and proceeds from the sale of necessary property,
dividends, interest, and income from the sale of
corporate rights. The above confirms the fact that
the main feature of finance and corporate finance
is the stock nature of their existence. Corporate
finance is in its content a system of economic
relations arising between the owners, the
management of the corporation, the board of
directors, the state, and other interested parties
concerning the formation, distribution, and use of
the funds of the corporation.
A corporation is the most important institution in
the modern economy, especially in the context of
martial law in Ukraine. In addition, in developed
democracies, corporate governance is an integral
part of the system of government. Corporate
governance is a system of relations between
company managers and owners, which is
implemented to ensure the effective operation of
the company. In turn, corporate governance
mechanisms ensure the responsibility of the
board of directors to shareholders, management
to the board of directors, owners with a large
stake to minority shareholders, and the
corporation to employees, customers, and society
as a whole. Corporate governance is focused on
ensuring that all these groups and institutions
perform their functions to the best of their ability
while maintaining a balance of interests between
them.
Currently, in the context of martial law in
Ukraine, the task of developing effective
mechanisms that implement the main functions
of a kind of corporate center is emerging. The
main mechanisms include the following:
1) mechanisms for distributing corporate
orders. The main task is to distribute
centralized orders received by the corporate
center among the enterprises that are part of
the corporation;
2) mechanisms for the distribution of corporate
finances. The task of these mechanisms is to
distribute centralized funds among the
corporation's enterprises. These mechanisms
mainly implement the corporation's
investment policy and development strategy;
3) corporate pricing mechanisms. The main
task of these mechanisms is to determine
corporate (transfer) prices for products and
services of the corporation's enterprises that
are consumed within the corporation;
4) corporate taxation mechanisms. The main
task of these mechanisms is to determine the
shares of profit (or income) to be allocated
by the corporation's enterprises to
centralized funds;
5) mechanisms of corporate strategy formation.
The main task of these mechanisms is to
identify priority areas and develop a
program for the strategic development of the
corporation. These mechanisms interact
with the mechanisms of corporate finance
distribution, which ensure the
implementation of the program;
6) corporate (mutual) insurance mechanisms.
The main task of these mechanisms is to
reduce the risks of the corporation's
enterprises by creating an insurance fund
and developing risk reduction programs
financed from this fund;
7) mechanisms of corporate resource
exchange. The main objective of these
mechanisms is to reduce costs and risks of
the corporation's enterprises through
mutually beneficial exchange of material
and financial resources.
It is incorrect to assume that good corporate
governance will undoubtedly ensure a company's
high competitiveness. Indeed, many large
"family-owned" companies do not meet
corporate governance standards and are quite
competitive, even under the conditions of martial
law in Ukraine. It is possible to note that
corporate governance insures against abuse, but
makes companies less flexible. At the same time,
companies that comply with corporate
governance standards have an undeniable
advantage in attracting investment. According to
investors, effective corporate governance
ensures management's honesty and transparency
254
www.amazoniainvestiga.info ISSN 2322- 6307
of the company's operations, so the risk of losing
money is significantly reduced, even in the
unstable economic environment caused by the
introduction of martial law in Ukraine.
For companies from developing countries,
corporate governance is particularly important,
as international investors are particularly
concerned about the integrity and business
qualities of their management. The capitalization
of companies with good corporate governance is
significantly higher than the market average.
This difference is especially pronounced in Arab
countries, Latin America (except Chile), Turkey,
Malaysia, and Indonesia. Let us consider some
models of corporate governance in developed
market economies (Table 1):
Table 1.
Corporate governance models in developed market economies
USA
Germany
Japan
Participation of
institutional investors
Insurance, pension and
mutual funds
Banks
Banks, enterprises
shareholdings-Cross
Rarely
Frequently
Frequently
Shareholder behavior in
the presence of poor
company performance
Sale of shares
Change of management
Replacement of
management
Concentration of capital
Low
High
High
* author’ development
Using the positive experience of foreign
countries to rebuild Ukraine in the postwar
period in the field of corporate management will
have the following consequences:
1) investment attractiveness will increase;
2) active attraction of long-term investors will
be realized;
3) the cost of credit resources will decrease;
4) the market value of the company will
increase.
Effective corporate governance is possible only
due to the human factor, its activity and
determination in difficult economic conditions,
understanding of the causes of the crisis and its
overcoming. In order to achieve a stable state and
even development of corporations, it is necessary
to use the method of anti-crisis financial
management, which could ensure overcoming
the crisis situation caused by the introduction of
martial law in Ukraine, and thus allow
corporations to stay stable in the market.
It is undeniable that in Ukraine corporate
governance is no longer just management: this
process involves the implementation of such
functions as planning, forecasting, effective
organization, coordination and control. The
implementation of these functions will allow
corporations to respond confidently and, most
importantly, quickly and correctly to non-
standard situations in the internal and external
environment. Thus, the necessary conditions will
be created for them to return to the original
normal situation that existed before the
introduction of martial law in Ukraine.
Conclusions
Based on the conducted study, the following
main problems in the development of corporate
governance in the economic sphere in Ukraine
can be highlighted, which are complicated by the
conditions of martial law: the management of
joint stock companies practically has not
perceived modern trends of corporate
governance development, based on building
qualitatively new relationships of subjects of
corporate governance; economic companies do
not perform the so-called “social” function,
which is a necessary component of the existence
of a corporation.
In addition, the current level of Ukrainian
legislation in the field of corporate governance
does not meet generally recognized international
standards, as it lacks legal norms regulating the
liability of corporate management for actions to
the detriment of the joint stock company, as well
as norms establishing liability for shareholders'
abuse of their rights.
In order to achieve effective corporate
governance in Ukraine during martial law, the
following requirements must be met in the
process of its implementation:
1) prepare corporate strategies to create and
gain a sustainable position in the market, as
well as to control each such strategy, both at
the stage of its development and during its
implementation;
2) identify and search for the external and
internal environment factors that have the
Volume 12 - Issue 65
/ May 2023
255
http:// www.amazoniainvestiga.info ISSN 2322- 6307
greatest impact on corporate governance and
its effectiveness in martial law;
3) collect information necessary for making
management decisions, and based on its
processing, analyze the financial and
economic condition of the enterprise, taking
into account the degree of possible crisis and
other risk factors.
It should also be noted that one of the most
important problems of the formation of the
national system of corporate governance for the
future is the lack of understanding of the
methodological foundations of the functioning of
corporate structures and the low level of
economic culture and knowledge of both the
population and individual representatives of
government agencies, which should regulate
these processes. The reason for this is the lack of
a clear definition of the basic concepts of
corporate governance, such as “corporation”,
“corporate governance”, “corporate finance”, in
legislation and economic literature. In addition,
an effective mechanism of corporate governance
in Ukraine under martial law and instability can
be achieved by making management decisions to
adapt corporations to internal and external
changes. Accordingly, further scientific research
on the study of these economic categories is
relevant.
Bibliographic references
Asensio-López, D., Cabeza-García, L., &
González-Álvarez, N. (2019). Corporate
Governance and Innovation: A theoretical
review. European Journal of Management and
Business Economics, 28(3), 266-284. doi:
10.1108/ejmbe-05-2018-0056
Belas, J., Amoah, J., Petráková, Z., Kliuchnikava,
Y., & Bilan, Y. (2020). Selected factors of smes
management in the service sector. Journal of
Tourism and Services, 11(21), 129-146.
https://doi.org/10.29036/jots.v11i21.215
Botvina, N. (2018). The financial market as a
constituent of social and economic sphere of
State. Economic Analysis, 28(1), 115-119.
https://doi.org/10.35774/econa2018.01.115
Chatzoudes, D., & Chatzoglou, P. (2022). Factors
affecting employee retention: Proposing an
original Conceptual Framework. International
Journal of Economics and Business
Administration, 10(1), 49-76.
https://doi.org/10.35808/ijeba/748
Holovach, A., & Pryputen, D. (2019). Innovative
approaches in the economic sphere. Baltic
Journal of Economic Studies, 5(4), 92-96.
https://doi.org/10.30525/2256-0742/2019-5-4-
92-96
Gorinov, P., & Mereniuk, K. (2022). Military law
in Ukraine: future prospects for development.
Futurity Economics&Law, 2(3), 18–27.
https://doi.org/10.57125/FEL.2022.09.25.03
Latynin, M. A., Pastukh, K. V., Tarasenko, D. L.,
Shevchenko, S. O., & Munko, A. Y. (2021).
Public administration in the economic sphere of
Ukraine: Strategic approach. Studies of Applied
Economics, 39(5).
https://doi.org/10.25115/eea.v39i5.4967
Menz, M., Kunisch, S., Birkinshaw, J.,
Collis, D. J., Foss, N. J., Hoskisson, R. E., &
Prescott, J. E. (2021). Corporate strategy and
the theory of the firm in the Digital age. Journal
of Management Studies, 58(7), 1695-1720.
https://doi.org/10.1111/joms.12760
Petrin, M. (2019). Corporate management in the age
of ai. SSRN Electronic Journal.
https://doi.org/10.2139/ssrn.3346722
Rynkevich, N. (2020). Development of
organizational culture in the management
system of the Food Industry Enterprises.
Agricultural and Resource Economics:
International Scientific E-Journal, 6(1),
123-145.
https://doi.org/10.51599/are.2020.06.01.09
Sapiński, A. (2022). Analysis of the role of
international organizations in the process of
regulating the rights of the fourth generation:
the main directions, the challenges of the time.
Futurity Economics&Law, 2(2), 14–22.
https://doi.org/10.57125/FEL.2022.06.25.02
Sliusar, S. (2019). Business in modern conditions of
management. Baltic Journal of Economic
Studies, 5(2), 206-213.
https://doi.org/10.30525/2256-0742/2019-5-2-
206-213
Tiep Le, T., & Nguyen, V. K. (2022). The impact
of corporate governance on firms’ value in an
emerging country: The mediating role of
Corporate Social Responsibility and
organisational identification. Cogent Business
& Management, 9(1), 1-24.
https://doi.org/10.1080/23311975.2021.201890
7
Tsekhmister, I, Malatsai, I, Nechitaylo, I.,
Yemelyanova, O, Korol, O., & Statsenko, N.
(2022). Current trends and current problems of
training of education manager. Financial and
Credit Activity Problems of Theory and
Practice, 6(41), 556-563.
https://doi.org/10.18371/fcaptp.v6i41.251532
Veh, A., Göbel, M., & Vogel, R. (2018). Corporate
reputation in management research: A review of
the literature and assessment of the concept.
Business Research, 12(2), 315-353.
https://doi.org/10.1007/s40685-018-0080-4