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Beyond Agency Theory: Why the Anglo-American Governance Playbook Fails in Romania
Every governance reform Romania has undertaken in the past twenty years has drawn from the same international toolkit. Independent directors, audit committees, board evaluations, transparency codes, these are the instruments developed, refined and exported by Anglo-American governance systems, and their influence on Romanian practice has been significant and largely positive.
But importing a governance model designed for dispersed shareholders, mature institutions and established board cultures into a market shaped by concentrated ownership, state influence and rapidly evolving regulation creates a structural mismatch. The tools aren't wrong. The problem is applying them to a context they were never designed for and expecting the same results.
Romanian boards are distinctive. Understanding how and why they differ from the model’s governance orthodoxy assumes isn't an excuse for lower standards, it's a precondition for improving them.
Corporate Governance in Emerging Markets: Moving Beyond Theory
If you govern, invest in, or advise a Romanian company, the governance frameworks you're using were built for a different kind of board. That doesn't mean they're useless. It means the gaps where they don't fit are precisely where Romanian governance tends to fail, and where reform efforts keep producing compliance rather than capability.
The differences aren't subtle. They're structural, and they shape what a Romanian board is actually for.
Addressing the Agency Problem in Romania’s Concentrated Ownership Context
In the Anglo-American model, the fundamental governance problem is an agency problem: professional managers run companies on behalf of dispersed shareholders who can't easily monitor them. The board exists to solve that problem, to represent shareholders' interests against management's potential self-interest.
In Romania, that problem barely exists in most companies. Ownership is concentrated. The controlling shareholder, a founding family, a majority investor, or the state, isn't a distant, passive owner who needs the board to watch management on their behalf. They're often in the room or directly appointing the people who are. The real governance challenge shifts accordingly: not management versus shareholders, but the relationship between a controlling owner and the minority shareholders who sit beside them, with considerably less power and protection.
That's a materially different job for a board to do. A governance framework that addresses the Anglo-American agency problem, by adding more independent directors, tightening audit procedures, requiring greater disclosure, only partially addresses what Romanian boards actually need to manage. The central tension isn't between management and shareholders. It's between dominant and minority shareholders, and most governance codes only recently began catching up with that reality.
Substantive vs. Formal Independence: Solving the Agency Conflict
Romanian boards have substantially increased their proportion of formally independent directors. What hasn't improved at the same rate is the substantive independence that matters: the willingness to dissent, in the room, when a controlling shareholder's interest and the minority's interest diverge.
Formal independence is structural. Substantive independence is behavioural. A director who meets every independence criterion in the BVB's revised Code can still fail to raise a difficult question if doing so risks their position, their relationship with the controlling owner, or the social consensus of the boardroom. The governance research on this is consistent across markets: in concentrated-ownership environments, structural independence tends to produce weaker results than in dispersed-ownership ones, because the incentive structure for exercising that independence is different.
This is not an argument against independent directors in Romanian companies. It's an argument for being more demanding about what independence means in practice, and for recognising that satisfying the formal requirement doesn't automatically deliver the substantive benefit.
Governing State-Owned Enterprises (SOE) and State-Influenced Entities
Romania has more than 400 majority state-owned companies and a further 200-plus in which the state holds significant minority stakes. Many of the Bucharest Stock Exchange's most prominent listings, Romgaz, Electrica, Nuclearelectrica, Transelectrica, are state-influenced or state-controlled enterprises where the government's shareholding shapes governance in ways that have no meaningful equivalent in mature Anglo-American markets.
In these companies, the controlling shareholder pursues objectives that aren't purely commercial: energy security, employment, political considerations, public policy goals that can shift with the electoral cycle. Boards in this sector don't just govern a business. They navigate the intersection of commercial governance and public administration, with a shareholder who can change its instructions without notice and whose definition of good performance may not align with any financial metric.
The Anglo-American model offers very little guidance here. State corporate governance is treated as a marginal case in standard frameworks, not a central feature of the market. Yet in Romania, state-influenced entities account for a substantial proportion of market capitalisation and employment. A governance model that doesn't address this isn't a complete model for Romania.
Meeting the 2026 Gender Diversity Deadline: From Law 11/2025 to Cognitive Diversity
Romania has been working to meet the EU target of at least 33% female board representation by 2026, supported by EBRD programmes, the ARIR-ANES Practical Guide launched in May 2025, and the transposition of EU Directive 2022/2381 into Law 11/2025. The progress is real: by 2020, 62% of companies listed on the Bucharest Stock Exchange had at least one woman on the board of directors, up from 40% in 2015. Romania has now transposed the directive, though as recently as January 2025 the European Parliament sent a formal notice of failure to transpose to Romania alongside ten other Member States.
What the numbers don't yet show is whether diversity is changing how boards think, or just who sits in the room. Research across markets consistently finds that gender-diverse boards outperform their peers, but the mechanism is cognitive diversity and diversity of challenge, not headcount. A board where women directors are present but deferential to a dominant owner or a dominant chair achieves the statistic without the substance.
Romania has moved on representation. The harder work, building genuine diversity of perspective into how the board operates, is what the next governance cycle needs to measure.
Navigating Regulatory Waves: BVB Code, NIS2, and DORA in Romania
Anglo-American governance systems evolved over decades. Board independence, audit committee standards, disclosure requirements, these developed iteratively, through market failures, regulatory responses and gradual cultural embedding. Romanian boards are being asked to meet the output of that evolutionary process in a fraction of the time, while simultaneously running companies in one of Europe's faster-growing economies.
The regulatory wave now hitting Romanian boards, the revised BVB Code, NIS2 personal director liability, DORA for financial entities, EU gender quotas, new related-party transaction approval requirements, sustainability reporting for in-scope companies, has arrived faster than any governance culture can comfortably absorb. The natural response is compliance: doing what the code says, satisfying the requirement, moving on. The problem is that compliance executed without genuine understanding produces the appearance of governance rather than its substance.
This is where Romania's governance trajectory is most distinctive: not lagging behind mature systems but compressing their development timeline so dramatically that cultural adaptation can't keep pace with regulatory obligation.
Building a Romania-Specific Lens for Effective Board Governance
Effective governance in Romania isn't about applying the Anglo-American model more faithfully. It's about recognising where that model fits, where it doesn't, and building capability in the specific areas the standard toolkit underserves.
That means taking minority shareholder protection seriously as a board function, not just a legal minimum. It means treating related-party transactions, more frequent and more sensitive in concentrated-ownership structures, as a genuine governance discipline, not a disclosure formality. It means developing state-sector boards capable of balancing commercial and public objectives without pretending the tension doesn't exist. And it means treating gender diversity as a question about decision quality, not just representation statistics.
Conclusions: From Exported Models to Local Governance Capability
Romania's corporate governance is improving. The question is whether it's improving in the right direction, or simply becoming better at satisfying a framework built for somewhere else. The boards that will perform best in Romania are not the ones that most closely resemble a FTSE 100 or S&P 500 board. They're the ones that understand what Romanian governance requires, and build their capability, their culture, and their independence around that reality.
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