ANALYSIS OF THE TRANSITION OPPORTUNITIES TO CORPORATE GOVERNANCE PRINCIPLES IN AZERBAIJANI COMPANIES

Abstract

This research aims to evaluate the current conditions and practical transition pathways to corporate governance standards in Azerbaijan. The focus lies on both state-owned enterprises (SOEs) and private or family-run companies, assessing the effectiveness of regulatory frameworks and internal governance mechanisms. The study applies a mixed-method approach, including document analysis of national legal acts (Civil Code, Listing Rules of the Baku Stock Exchange, Cabinet resolutions), content analysis of ESG reports, and a comparative review of OECD and EBRD country diagnostics. The findings indicate that although a strong regulatory foundation exists, practical implementation varies significantly across sectors. Common weaknesses include the limited authority of independent board members, the superficial nature of ESG disclosures, and underdeveloped internal audit and risk management structures. The scientific novelty of the study lies in proposing a “transition roadmap” that outlines a step-by-step approach to enhancing corporate governance structures within Azerbaijani companies. This roadmap includes adopting model charters for board committees, introducing the “comply or explain” principle into annual reporting, and gradually integrating ESG metrics starting from governance and social indicators. The study's practical relevance is high: it provides actionable guidelines for improving investor confidence, aligning corporate practices with international standards, and strengthening governance transparency and efficiency. In particular, the model addresses the unique characteristics of Azerbaijani firms operating in a transition economy context, where familial ownership and informal decision-making often dominate.