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Earlier studies indicate that Bosnia and Hercegovinia, Croatia, Macedonia, Montenegro and Serbia, as well as other countries in transition, are characterized by a relatively high ownership concentration, which points to the presence of conflict of interest between

Earlier studies indicate that B&H, Croatia and Serbia, as well as other countries in transition, are characterized by relatively high ownership concentration. This point to the presence of so called second agency problem of corporate governance i.e. conflict of interest between majority and minority shareholders and possibility of abuse of minorities’ rights. It has been widely accepted that company law and regulation of capital markets play a significant role in the development of financial markets, corporate governance and corporate finance and that by means of improving the legal environment it is possible to restrict the possibilities for expropriation of minority shareholders. In the paper we analyze and compare the relevant provisions of company laws and laws on capital markets in B&H, Croatia and Serbia. Unlike previous research on the quality of corporate governance in these countries that focused mainly on implementation of the OECD Principles, we focus on the pre-defined key mechanisms to protect minority shareholders with no aspirations to cover all aspects of the protection of shareholders' rights and seeks to identify the weaknesses in the legislation. We derive conclusions on the current level of minority shareholders’ protection on paper provided by the laws in these countries and the necessary courses of action to improve their legal protection.

This paper presents institutional framework, implementation and education in the new management discipline – facility / asset management in international practice and in Croatia. The aim of this paper is to: • define the term Facility Management and the role of Facility Manager ; • present brief history of facility management development, international professional associations and basic standards in facility management: • provide a case study and analysis of facility management and outsourcing in INA Plc., Croatian oil and gas company. One of the areas on which today’s business world, in cooperation with academic community, builds up future development and sustainability, is the facility/asset management . Management of assets (their selection, investment, maintenance, control and renewal) is crucial for profitability of any industry in which asset operations play important role in business strategy. Excellency in management of physical assets is a systemic approach to efficient use of assets owned or operated by the state, local community or a company. The key goal is to minimise costs of assets during their life cycle and to diminish risks. Facility / asset management is particularly important in countries in transition which lack skills in management of state assets, do not have proper asset registry and elaborated strategic plans. By using a multidisciplinary approach, a good facility manager can significantly contribute to improved financial liquidity and higher quality of services offered by assets. Previous studies (Gusan 2007) indicated that the need for improvements in asset management resulted mainly from the following: • growing number of services expected from physical assets, but with limited investments,  unresolved legal aspects, or the fact that assets are not in function, which then burdens operational costs,  high fees for use of infrastructure mainly as a result of inefficient use of assets. Nature of business activity and type of industry are the factors that have a decisive impact on the model, structure and organizational model to be implemented in physical asset management. Discussions about optimal models in managing this strategic function go on, but there are no rigid, predetermined or standardized organizational solutions. Fast changes in the environment call for continuous review of adopted mission, vision and strategic plan, including search for efficient model for physical asset management which is in the focus of numerous institutions in the world. A common platform of all asset management models is software support in IT system, such as for example GIS, which in combination with facility management systems (CAFM) enables advanced and efficient management of physical assets and pertaining infrastructure. Geographical information system (GIS) is the system for management of spatial data and their attributes. This IT system performs several activities including integration, storing, sorting out, analyzing and presentation of geographical information. GIS is a tool called "smart map" which enables users to create interactive queries (search done by the user), analysis of spatial information and their sorting out. CAFM – Computer Aided Facility Management provides IT support in administration of structured data and information in one place. CAFM provides also information on technical installations, infrastructure, interior of a facility, business contents and processes as well as relevant information for monitoring, optimization and control of facility maintenance costs.

A rise in the capital coefficient is often used as a reference when indicating the level of excess capital means and equipment in the hospitality industry. As the capital coefficient is the ratio of capital stock (hotels, auto-camps etc. fixed assets), to tourism’s GDP, it can be described as an indicator that shows how much capital stock is required to produce one unit of tourism’s GDP, and it is used as a criterion for the efficiency and level of over-supply of capital stock. Its time series volatility can also measure an over or under-utilization of tourism and catering capacity at a national level as a short-run temporary variation in tourism’s economy. This paper intends to make a comparison of the capital coefficients over the tourism and catering sector in Croatia and aggregate economy in the time span 1952-2004. Throughout our paper we use a dummy variable indicating recession in the circle of Western European countries, e.g. in Austria, Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Sweden, Switzerland and the United Kingdom. After forming a dynamic regression model we will test if the recession occurrence in Western Europe successfully explains the underutilization of aggregate and tourism capacity in Croatia.

Public-private partnership represents cooperation between public authorities and private sector towards to greater effectiveness in providing of public goods and services. It can be applied for realisation of projects in many areas such as construction of infrastructure, for education, health, sport, but it's appliance in realisation of those projects and in providing public goods and services still isn't on it's maximum threshold. PPP's role is extremely important in stimulating economic prosperity, whereas development of road infrastructure is prerequisite for it and especially in that field public-private partnership has the most frequent use. Worldwide, central roles in implementation of public-private partnership belong to United Kingdom, Australia and United States. The goal of this research is to explain the concept of public- private partnership, necessarity for exactly that model of financing projects, what are the most important/significant areas of implementation of public-private partnership and how can be realised the process of selecting private partner. Attention will be aimed on the analysis of implementation of public-private partnership in several countries and based on this analysis author will try to reach valid conclusion of the role of public- private partnership and its possibilities and constraints in providing of public goods.

In conditions of globalization and recession which has affected in recent time almost entire world, the management of public sector, but also and business sector is faced with more additional requirements and efforts for quality management and for more rational and efficient spending of resources. In such conditions, the process of convergence of financial reporting in the public sector to the practice of business sector is present in many countries. The process of convergence of financial reporting of public sector to the practice of business sector includes the implementation of International Financial Reporting Standards (IFRS) in the public sector. Assumption of convergence of financial reporting in the public sector with the business sector reporting is based on the application of International Public Sector Accounting Standards (IPSAS) which are approaching and are based on IAS/ IFRS. Implementation of IFRS in the public sector implies application of accrual basis of accounting. This paper deals with problems that are connected with implementation of accrual basis of accounting and IPSAS. It shows problems that countries meet in crossing on accrual basis of accounting.The paper analyzes the changes in government accounting of Croatia, Bosnia and Herzegovina and Slovenia.

Ridderstrale and Nordstrom point out: «In the world of developed capitalism, success is not measured by getting a backstage pass ; only imagination and authenticity are put first, and future, as always, belongs to those standing in the front lines.» This century is the «century of entrepreneurs». This especially holds for Croatia, in which true originality must become more valuable than ever. Courage, boldness, and, consequently, innovations, represent the future in the world of entrepreneurship. Economic crisis is a chance for Croatia, and small business is a possible potential of economic prosperity. This claim has been supported by the fact that the Croatian government focused on small entrepreneurship in its project «Croatia in the 21st Century», as a generator of development of entire economy, which emphasises the country's national policy and re-organisation of social institutions in favour of small business as the key determinant of entrepreneurial success. The meaning of entrepreneurship in the development of Croatian economy includes the same determinants as in other European countries. On European level, entrepreneurship stimulates opening of new workplaces and economic growth ; it has been crucially significant for competitiveness, it develops personal resources and develops general social interests. Creating entrepreneurial conditions demands a co- ordinated government policy and the concept of a comprehensive legal, strategic, and institutional approach to development of small business. The policy should be implemented continuously, by introducing the standards of the European Union, and implementing legislation for government grants. Small business will maintain its development with stimulative measures, become a factor of adjustment to market trends, total economy development, which is, after all, a pre- requisite of increasing competitiveness of the Croatian economy on the global market. The basic question the authors want to answer in this paper is whether accession to the European Union would be profitable for small business. The purpose of the paper is to present the expected positive effects on small enterprises upon accession to the EU, and point out possible disadvantages and costs of remaining outside of the integration of European democratic countries. The objective of the paper is to present the current state of small entrepreneurship in the Republic of Croatia from the point of view of key EU entrepreneurial documents, and to design a dynamic concept of entrepreneurial economy of the Republic of Croatia.

U ovom se radu identificiraju faktori koji objašnjavaju zašto neke zemlje unutar zapadnog Balkana ostvaruju brže stope, dok druge bilježe sporiji gospodarski rast. Za analizu gospodarskog rasta u razdoblju od 2001.-2008. godine izabrane su sljedeće determinante: izvoz per capita, FDI per capita i stopa nezaposlenosti, jer su se jedino one pokazale signifikantnima za heterogenu skupinu zemalja zapadnog Balkana. Istraživanje je pokazalo relativnu koheziju kod Bosne i Hercegovine, Srbije, Crne Gore i Makedonije, te veliku disperziju kod Hrvatske, kao lidera i Albanije, koja se našla na začelju. Neujednačenost u procesu gospodarskog rasta posljedica je neujednačene makroekonomske situacije u pojedinim državama, kao i političke nestabilnosti privreda. U provedenom istraživanju pokazalo se da vanjskotrgovinski sektor nije imao značajnu ulogu u procesu gospodarskog rasta, kao ni inozemni ulagači, dok je najveći uteg procesu rasta bio kontingent nezaposlenih radnika. Naime, strani investitiri ulagali su postojeća poduzeća pa otvaranja novih radnih mjesta nije ni bilo.

This article will primarily focus on the intuitive and rational management decision-making and on individual and group decision-making. The main aim of the conducted research is to examine the decision-making approach at different managerial levels. The approach to decision-making was analyzed in the context of managers' beliefs that their decisions and goals had been achieved mostly as a result of their personal efforts (internal locus of control) or external factors which they could not have had any impact on, i.e. economic and social conditions, impact of other employees in their organization, managers, etc. (external locus of control). The study was conducted among managers at different management levels (we define them as low, medium and top-level managers), who are also postgraduate students of Business Systems Management.The results show interdependence among the variables of intuitive and rational decision-making and locus of control. They can be applied in creating course curricula intended for improving communication and decision-making techniques of managers, as part of their life-long learning. In the continuation of the research the connection between the stated variables and personality traits will be examined.

The purpose of this paper is to examine the practice and the role of HRM in the companies from Croatia and its influence on company performance. Modern companies challenging rapidly changing environment have to be ready for requirements to change the role of HRM, especially today when the companies are under the pressure of the world economic and financial crisis. The focus in this paper research is on the professionalization of HRM function (education level), recruitment, training, compensation strategy and ICT methods used in HRM process. The companies’ categorization is made by number of employees, which is one of the most popular criteria for differentiation between the companies. The HRM function is one of the five the most important basic functions of management. Besides the function of HRM, other functions are: planning, organizing, leading and controlling. The function of HRM plays very important role in each organization, but its role can be different from companies to companies, especially in the segment of ICT industry. But, still there is no doubt that HRM has significant impact on the overall results of the companies. This paper presents a qualitative and quantitative analysis of HRM function in Croatian companies based on the survey method and extensive literature analysis made by researchers.

The relationship between gross domestic product (GDP) and total and per capita energy consumption variables of 8 South-eastern Europe countries (SEE 8) has been analyzed in this paper. Energy intensity as derived indicator of above mentioned variables usually depends on a country’s development phase. Paper emphasis energy intensity differences based on GDP calculated at constant prices and GDP at purchasing power parity exchange rates (PPP). Paper investigates relation between these two variables for regional countries as compared to EU 27 benchmark. Analyzed regional SEE 8 are Albania, Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Macedonia, Bulgaria and Rumania. Paper is related with Conference topic, Regional Economic Growth and Development. A linear relationship between GDP per capita and energy consumption per capita in SEE 8 as compared to EU 27 might be expected. Developed countries, like EU members, usually have lower growth rates of energy consumption than the growth rates of gross domestic product. Explaining part of differences in the development and energy indicators behaviour between SEE 8 and EU 27 has been paper’s major goal. The findings show economic development and energy policy implications of differences in economic growth, energy consumption and energy intensity between SEE 8 and EU 27.

According to the dividend signaling model, dividend increase conveys good news and dividend decrease conveys bad news about the firm’s future. In accordance with dividend signaling model, dividends reduce information asymmetry by acting as a trustworthy signal from corporate insiders to the company’s shareholders. Some studies find a positive relationship between dividend and future earnings changes, while others report a very weak positive relationship, no relationship or a negative relationship between dividend and future earnings changes. On the other hand, there is evidence that describes dividends as a lagging rather than a leading indicator of earnings. The purpose of this paper is to investigate if there are statistically significant differences in specific financial ratios between companies who have increased the dividend and companies who have decreased the dividend. The research will try to determine if the financial results of the companies that have increased the dividend were superior prior to the dividend increase confronted with the companies that have decreased the dividend. If there is statistically significant difference in financial ratios between the companies that have decreased and those that have increased the dividend, we can distinguish what financial ratios are important and, based on those financial ratios, we can make assumptions about the company’s intention to increase or decrease its dividend.

This paper investigates the controversy and dynamics of corporate social responsibility in the Croatian banking sector. From 1995 onwards Croatia pretty much fully accepted Wall Street-neoliberal global policy experiment which led to loss of local social solidarity. Firstly the banking sectors channeled its domestic savings mostly towards household microloans, while other sectors, those representing the engines of sustainable economic and social development, are therefore denied bank credit. When choosing to channel local savings between very risky and low profit SME projects or high profit and low risk household loans, Croatia’s private commercial banks have chosen the second. Second, the international donor community established a number of microfinance institutions (MFIs) in order to promote very small-scale entrepreneurship among poor individuals and families. Significant numbers of MFI clients ultimately failed and many of these poor individuals ended up in deeper poverty than before they had accepted microloans. As a result, in the period 1999-2008 household loans grew by 584% while enterprise loans grew ‘only’ 278% creating heavily indebted nation with disastrous socioeconomic implications. Therefore, while on one hand banking sector donates funds that generate social and economic benefits to its community, on the other, by enormous household credits expansion, it paves the way toward vicious circle of poverty. Such credit policies produce many negative externalies and represent a burden to sustainable long term social and economic development. This paper also explores and compares how certain practices evolve as a result of various social and economic determinants within the region as well as of global factors such as the international practices of well recognized multinational companies, nongovernmental institutions etc. On the end we stress out some of the experience and expectations evolving from CSR, specifically in the banking sector, and provide some ideas on how to stimulate and apply such cross-border learning. We organize our paper as follows. Section 2 discusses theoretical framework and some facts about CSR practices. Section 3 analyses economic and banking sector development in Croatia. Section 4 stresses out the data on Croatian private banking sector operations and its implication on socio-economic development. Section 5 sets out experiences and expectation evolving from CSR with an emphasis on the banking sector. Section 6 brings concluding remarks.

In recent literature of economic growth a great importance is given to the quality of human capital as one of the most important developmental resources. The authors’ aim in this paper is to search what is position of Croatia according to the European Union countries regarding the educational attainment of its population.

A large number of governments experience fiscal deficits for different reasons. The growing discrepancy between government revenues and expenditures accents the deficits of the whole public sector even more, influencing therefore the growing trend of internal and external indebtness. A fiscal deficit may have different economic consequences evidenced in rising interest rates, reduced investment, national currency appreciation, private investment crowding out, national and private savings cut, export crowding out and similar. Although theory offered an extensive number of arguments for these and opposite points of view, research in this field didn't show any empirical results for neither perspective. Estimating a VAR model the authors will test the effect of consolidated general government budget deficit on the interest rate in Croatia. The Granger casuality will show the direction and amplitude of such effect, while the impulse response analysis will show the influence of the budget deficit increment on the interest rate.

The purpose of this paper is to analyse the impacts of the global recession on selected south-east European countries. The analysis comprises the following countries: Bosnia and Herzegovina, Croatia, Macedonia, Montenegro, Serbia and Slovenia. The implicit hypotheses of this paper are therefore related, firstly, to the question of sustainability of the global model of development and, secondly, to the sustainability of the economic model of development of the south-east European countries in which overall weak export orientation is a constant problem. The first signs of economic recession in the south-east European countries were a significant reduction of exports which was the consequence of a strong decline in foreign demand. The stagnation and reduction of activities in other sectors, especially in trade, construction and industry, soon followed. A reduction in personal consumption and the need to stop the growth of government spending indicate that in the following period the only and major sources of economic growth are an increase of investments and exports. The results confirm the possibilities of the strengthening of mutual economic cooperation in the market of the region and on the international markets especially in the circumstances of the global recession. There is a necessity of the review of the existing economic models which should be based on export orientation especially export of manufacturing.

The New Economic Geography (NEG) explains the agglomeration as well as dispersion of economic activities and employment in the national and international context. On the national (or regional) level it deals with the efficient concentration of forces between developed and developing areas while on the global level it points out specialization and development differences among countries. The problems of regional policy on the national level arise especially when it deals with the aim to increase competitiveness. In the case of small countries such as Croatia and the growing importance of the SMEs, effective way to increase competitiveness would be through the formation of clusters because in that way companies can create stronger mutual network that will help SMEs in their efforts to place the production on the competitive international market and to create better connections with their customers and suppliers. The aim of the study is to explain the implications of NEG on location of economic activities in the Southeast European countries (case of Croatia). The paper deals with the location of production in Croatia so the location quotients are calculated at regional level in order to identify the core activities for the potential cluster development. The cluster analysis is applied and the Croatian counties are grouped according to the determined core economic activities. The results show ample cluster development potential in Croatia that will be significant for the further researches of companies' interconnections in Croatia but also all over the SEE region and for its better integration into the European and world economic movements.

International reserves play an important role for every central bank. They are important as a store of value and as a factor for conducting the monetary policy of a country. The importance of reserves is further emphasized as they role in estimating a country’s macroeconomic stability is threefold. Firstly, they show the ability of a country in ensuring its international liquidity. Secondly, they are important in safeguarding country’s credibility in international environment and thirdly, in enabling easier access to international capital market. This means that for central banks it is important to have an adequate level so they could intervene in the best possible way in the case of problems (for instance, exchange rate movements), shocks – external shocks - problems with foreign currency liquidity, or just to keep the country’s credibility considering international debt. To have an adequate level means to be ready for such situations. Among rules, which say what the appropriate level of reserves should be, two are distinguishing. First says that the reserves should be above the level of country’s three months import and second that they should cover one year country’s international debt – principal and interest. This paper reviews present literature on level of international reserves and scrutinize it’s appropriateness in distinguishing CEE countries, analyzing their movements and reasons for those movements and evaluating their usage during current financial crises. Therefore the aim of the working paper is to stress out the significance of international reserves and their role during financial crises.

Science and Technology Parks (STPs) are an important part of entrepreneurial infrastructure which fosters growth and development of technology-based firms, even though some STPs mainly focus on the real-estate aspects and cannot be considered a tool for economic growth. Our work will present the context in which Croatian STPs exist. We discuss the framework of models and strategies for STPs, developed in IASP (International Association of Science Parks) . These ideas can be adapted to the different contexts because they comprise some fundamental building blocks which distinguish STPs from real estate based projects. The success-improving factors observed for STPs are the focal point of our research and make up the basis for constructing the research questions. The research comprises of an internet based survey aimed at STP tenants, asking their opinion on the influence of operating in a STP surrounding on their firm's performance. One of the main values a firm gets by locating in an STP is easier access to a number of useful resources, such as physical and financial means, and exposure to knowledge spill-over, combined with decreased cost of tenancy. Institutional support from government can also improve survival odds of technology-based firms. The final STP success factor is creation of connections with universities and research institutes for effective technology transfer. Data gathered through our questionnaire was combined with secondary data from BIOS' recent study of Croatian STPs, as well as compared to data gathered from Polish Science parks . We contacted tenants of 5 Croatian STPs that are perceived as the most successful. Our target group consisted of 69 firms which were contacted by telephone and sent a link to the online survey which enabled the respondents' anonymity and made them more willing to answer the questions. In the process, 20 answered questionnaires were collected, which makes a statistically relevant 29% of our chosen population. This enabled us to make relevant conclusions on the subject researched. The questionnaire sent comprised of a mixture of 22 open-ended and close-ended questions that were designed to shows characteristics of on-site firms and their view on the operating within an STP. We propose following suggestions for improvement of existing and creation and development of the new STPs. Considering the building blocks needed in development of STPs, Croatian STPs should work on increasing their management support to tenants. Educational and consultancy services were perceived as insufficient, and tenants use them very rarely. Existing Croatian STPs should further strengthen their connection with universities, whereas these connections should become more functional instead of just being nominal. Among value-added services more emphasis should be put on improvement of connections with local authorities and civil associations, access to research laboratories and technology, more involvement with IPR consulting, and improving tenants’ opportunities to access venture capital. Creation of new jobs is evidently limited with scarce spatial resources, which delays increase in number of tenants, and their physical and economic growth. Based on these recommendations we propose that government should support these suggestions and help STPs implement best practices in their work. However, the financing should be found to implement those measures so that business incubators could serve as embryos for developing network of successful Croatian STPs. Further research for monitoring of these processes is recommendable on regular basis.

Many marketers (eg. M. Porter, Woodruff, Zeithaml) point out that creating superior value for consumers represents the key element in ensuring company’s market success. For each company it is important to identify which factors determine the level of perceived value of its current and potential consumers because the improvement of product /service can be achieved only with the improvement of these factors. In theory, two approaches are known in the conceptualization of perceived value for consumers. The first of these explains and analyzes perceived value as a construct composed of two parts - received benefits and incurred costs, while the second approach looks at the value as a multidimensional construct. Since convenience goods participate with more than 30% in total consumption in countries of the region, it is important to explore characteristics of perceived value of this product category. The perceived costs are the real challenge, as they are poorly researched and analyzed, while they increase the total purchase costs. Convenience goods are frequently used products and shopping is routine, with small consumer involvement. However, opening retail outlets on cities’ outskirts increases cost of travel to a convenience goods shop. Hence, in this paper, authors will investigate the construct of perceived value, with a special focus on analysis of perceived value factors in the convenience goods market.

In today's turbulent environments, and with the ubiquitous influence of globalization, market participants must find a way to distinguish from the competition. At the same time, the requirements of customers and other stakeholders are increasing. Relevant institutions prescribe more severe business conditions, while the community seeks compliance of the principles of sustainable development. Furthermore, foreign investors and business partners make business only with those companies who apply all professional and international business standards. Therefore, this paper analyzes the impact of applying international standards to achieving a better competitive position in international markets. The impact of applying quality management standard ISO 9001, the environmental management standard ISO14001 and health and safety management standard OHSAS 18001 on the international business will be explored. Implementation of international standards, measured by the number of certificates, were compared with data on trade performance and productivity in order to prove that the application of these standards affect the achievement of a better competitive position. Research results should show how these standards influence competitiveness. In addition, it is necessary to specify a limitation of this research. Firstly, productivity is just one of the factors that influence competitiveness, and secondly, currently available data on the number of certificates, considering ISO 9001, ISO 14001 and OHSAS 18001, are not sufficient indicator of all the effects of their implementation. However, this is a relatively unexplored area and conducted research could provide a good basis for the future analysis of the competitiveness and standardization issues.

Načelo neovisnosti je jedno od najvažnijih načela interne revizije u suvremenim uvjetima. Kako je već naglašeno, ovo načelo podrazumijeva da interni revizor u obavljanju svog posla mora biti neovisan i potpuno samostalan. Međutim, zbog određenih okolnosti moguće je da neovisnost i objektivnost internih revizora bude narušena. Međunarodni standardi za profesionalno obavljanje interne revizije naglašavaju da ukoliko je došlo do narušavanja načela neovisnosti i objektivnosti takva informacija mora biti izložena određenim stranama pri čemu će objava ovisiti o načinu narušavanja pretpostavke neovisnosti i objektivnosti. Međunarodni standardi za profesionalno obavljanje interne revizije ističu da je načelo neovisnosti objektivnosti narušeno ukoliko je interni revizor revidirao aktivnosti i operacije za koje je prethodno bio odgovoran. To zapravo znači da bi se revizor trebao izuzeti iz revidiranja specifičnih operacija ukoliko je u protekloj godini bio odgovoran za provođenje istih. Ukoliko je ipak interni revizor obavljao operativne aktivnosti nad kojima bi trebao obavljati nadzor nužna je komunikacija sa članovima uprave kako revidiranje takvih aktivnosti ne bi bile u domeni internog revizora. S druge pak strane, neovisnost internog revizora nije narušena ukoliko revizor da određene preporuke za kontrole i sustave prije negoli su iste implementirane. Isto tako, povremena uključenost internog revizora u operativne aktivnosti, ukoliko je ono adekvatno dokumentirano i komunicirano višoj razini menadžmenta ne znači nužno da je došlo do narušavanje neovisnosti i objektivnosti. Međutim, takvi slučajevi tada trebaju biti detaljno razmatrani od strane menadžmenta i internog revizora.

The characteristics of the controlling function & instruments 2001/2007 in Croatian firms are presented in this paper. We conducted empirical study with the aim of confirming the hypothesis on inadequate controlling functions & instruments for avoiding possible crisis in the Croatian firms. We found that there is a domination of operative over strategic tasks, tools and instruments in Croatian firms. This results show that firms in Croatian are not well prepared for possible crisis, instruments that there are using are inadequate for preventing business crisis. The results also show the increasing of the role of controlling in Croatian firms: 53% of Croatian firms in sample have a controlling department in the organization structure 2001 and 6 years later they have been 74%. The controlling department is mostly centralized, usually in the second management level, organized as a unique organizational unit and with the head of the department who is in most cases responsible to the board of directors. Top management is considered to be the main user of information from the controlling function. It is interesting that firms with an implemented controlling function have a more democratic management style than the firms that have not developed the controlling function

With the step up of globalization and integration process, the importance of taxes and tax policy increase. Taxes are important factor in taking investment decisions and they are continuously analyzed regarding theirs efficiency, fairness, simplicity, transparency and fiscal profusion. Respectively, they are subject to constant changes. Especially complex are income and capital gain taxation systems. Mentioned tax forms, besides theirs economic and social importance, have also very expressed fiscal meaning. Today, more and more attention is dedicated to capital gains tax. Taxation of capital gains is connected with a series of theoretical and practical problems. In theory, it is considered that capital gains should be the subject of taxation because they are one of possible source of income. But in different countries practices, approaches to capital gains taxation vary. It should be considered that eventual implementation of capital gains taxation has notably considerable economy impact, while social and fiscal impacts could be relatively small or almost negligible. The goal of this research is to indicate possible implications of capital gains taxation implementation in Croatian tax system. Through the analysis of this tax form it will be demonstrated differences in capital gains taxation treatments in EU countries, it will be isolated potential advantages and disadvantages of this tax form, and established possible implications on further financial market development in the Republic of Croatia. Based on this analysis, authors will try to reach valid conclusion on adequacy of its implementation in Croatian tax system. Besides that, research proceeds can find theirs implementation in the process of (fiscal) adaptation and association of Republic of Croatia to the European Union.

The empirical evidence for either PPP or UIP individually is mixed at best. This paper combines the two arbitrage conditions into a single relationship, as the empirical literature is more supportive of such a combined relationship than of either PPP or UIP separately. Johansen’ s cointegration method is used to verify the existence of a long-run relationship between the HRK/EURO exchange rate, Croatia and EU prices, and Croatia and EU interest rates. Using the estimated relationship, we are able to determine whether prices, interest rates and the exchange rate were consistent with PPP and UIP over the sample period. We then calculate the equilibrium exchange rate that would have restored PPP and UIP – this is the equilibrium exchange rate HRK /EURO according to PPP and UIP. At the end of the paper we are able to calculate the elasticity of tourism demand in Croatia on each concept of nested equilibrium exchange rate. Since the PPP is a long-run condition, it is assumed that PPP forms the basis of expectations in the UIP condition. Algebraically, this relationship is obtained yielding: = Rearranging: (5) where Equation (5) can be assumed to represent the equilibrium condition. In the real world, however, nominal exchange rates are not, always and everywhere, determined by price levels and interest rates. For example, speculative activity or commodity price movements could lead to a sustained and significant deviation from equation (5). Therefore, macro-economists and policy makers are keen to know rather equation (5) can be considered as an equilibrium condition toward which exchange rates, price levels, and interest rates tend to move in the long run. In other words, whether price levels, interest rates, and the exchange rate are cointegrated or nominal exchange rates could be expected to deviate from this equilibrium condition, such that: (6) Where t has zero mean and finite variance and represents the deviation from equilibrium PPP-UIP condition. In the next section, the study empirically estimated equation (6), using multivariate cointegration approach to test for long-run equilibrium relationship. We estimate a cointegrating relationship between the nominal HRK/EURO exchange rate, Croatia and EU prices, and Croatia and EU interest rates. This involves estimating a Vector Error Correction (VEC) model. Formally, this study, using the Johansen technique, tests whether there exist one or more vectors of coefficients such that: w1e12t + w2p1t + w3p2t + w4i1t + w5i2t + w6 ~ I(0) 1 1 -1 - The expected values of w1, … ., w6, implied by equation (6) are displayed underneath. We start with a five-variable system Yt = [e12t, p1t, p1t, i1t, i2t]. In the system, p1 and p2 are the logs of the Croatia and EU consumer price indices, respectively, e12 is the log of the HRK/EURO exchange rate, i1 = log (1+ R1/100), i2 = log(1 + R2/100), R is the 3 month time deposit rate in Croatia(CROL) and R2 is the 3 month LIBOR rate (EURO). All series are seasonally unadjusted. The sample period is from 1994:1 to 2007:3 covering the recent floating exchange rate regime and domestic and international capital market liberalization. We try to descript the main results in non-technical voice because the complex technical analysis of cointegration is performed in very rigorous sense in the paper. First, this paper has provided evidence of a systematic long-run relationship between the exchange rate, interest rates and prices. The obtained result indicates that Croatian nominal exchange rate is, very closely in line with its explanatory variables. This relationship does match the strictest form of PPP and UIP, but even more stricter form of UIP and weak form of PPP since Croatia interplay of volatability among domestic and Euroland interest rates appear to affect the exchange rate more than relative prices affect the exchange rate. So, the main result of our study is that the estimated relationship used strict UIP and weak PPP, can estimate a conditional equilibrium nominal exchange rate by minimal standard deviation (or by the best performs). Second, the analysis has provided evidence that there is a cointegrating relationship between the exchange rate, interest rates and prices implying that the exchange rate is determined by combined two- fundamental arbitrage conditions viz., UIP and PPP. This suggests that prices (domestic and foreign) and interest rates (domestic and foreign) are playing significant role to derive the current exchange rate. Fluctuations in currency value HRK/EURO can be prevented, we would underline, first, by controlling interest rate movements and second, something less important, but implicitly, through achieving price stability as well. Third, the first cointegrating relation is normalized by the nominal exchange rates for Croatia and we found that the estimates of the normalized cointegrating vector have signs that match the theory of combined PPP and UIP, although the benchmark unrestricted conditional equilibrium exchange rate produced maximal misalignment and therefore maximal deviation in the long run from the nominal exchange rate. But nevertheless equilibrium exchange rate in other two combined forms follow very closely the trajectory path of nominal exchange rate – we didn't notice any relevant overvaluation accordingly restricted cointegration relations. We find that the elasticity of tourist demand on exchange rate fluctuations is calculated by theoretically accepted sign (beside when regressed on unrestricted conditional exchange version – even insignificant) and is very elastic. Overall, the findings have important implications for the enlivening the tourism demand because financial reforms and interest rate policy could provide help in designing effective exchange rate policy, and strengthening tourism position in Croatia. Pfaff, Bernhard (2006), Analysis of Integrated and Co-integrated Time Series with R, New York NY: Springer Johansen, S and K Juselius (1992), "Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for UK, " Journal of Econometrics, 53, pp 211 – 44. Aysun, G. and Özmen, E. (2001), "Do PPP and UIP Need Each Other in a Financially Open Economy? The Turkish Evidence", Working Paper No. 101, Economic Research Center, Middle East Technical University. MacDonald, R (2002), "Modelling the long-run effective exchange rate of the New Zealand dollar", Reserve Bank of New Zealand Discussion Paper DP2002/02.

Modern financial leasing is relatively new in transitional economies. It was introduced in the early 1990s at the time of transition from largely centralized economies into free market economies. Transitional countries - East European countries by geographical location, are still in the process of multidimensional economic transformation. Considerable changes in existing economical condition entail a necessity to use non-traditional means to attract investment and capital into the transitional economies. Leasing is one of the most important and efficient financial instruments in developing economies. Its numerous advantages have tremendous impacts on manufacturing progress and quality of the production sector including total economic growth. Regardless, it is evident that its usage in transitional economies is insufficient. Therefore the purpose of this research is to define and analyze the main barriers for development of leasing in transitional economies. The research will be based on the methods for analyzing and comparison of legal, tax, accounting and further aspects of leasing in transitional economies in opposed to developed economies. The aim of this research is to emphasize that well-developed legal environment accompanied with clearly defined accounting rules and favorable taxation, are dominant factors in development of leasing industry in transitional economies.