Croatia, a founding member of the formerRepublic of Yugoslavia and a current member of the EuropeanUnion (EU), is a high-income country in Europe and CentralAsia. Given that high quality financial reporting promotesgood corporate governance, reduces uncertainty and risk, canhelp to lower the cost of capital, and boosts investorconfidence, it will play a critical role in the country’sstrategy to champion private sector led growth for economicdevelopment. Croatia’s preparation to join the EU requiredreform of its corporate financial reporting framework andpractices, among other things, and laid the foundation forenhanced financial reporting and increased transparency.Although the country’s accession to the EU on July 1, 2013was a single historical point in time, it encapsulated yearsof transformation of the statutory and institutionalframework in every aspect of the economic, social, andpolitical spheres of the country. The purpose of thisreport, which focuses on Croatia’s adoption andimplementation of the corporate financial reporting aspectsof the acquis’, company law, is to enhance understanding ofhow successful transitions work in practice, that is, whatmakes some reforms succeed where others fail. It attempts toanswer questions such as: what happens when countries adoptinternational standards; what issues arise when one tries tomerge differing legal traditions; how to achieve reform whenthere are capacity constraints and key implementinginstitutions are missing; what are the different strategiesthat can be used during various phases of a reform process;and, more generally, what factors encourage failure or leadto success?
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