CEO and Board Characteristics as Determinants of Private Benefits of Control: Evidence from the Russian Stock Exchange

This paper investigates whether and how various characteristics of CEOs and corporate boards are related to the severity of corporate governance problems within firms. The latter is proxied by private benefits of control, which we measure for dual class stock firms using the voting premium approach. Our empirical analysis is based on data from Russia and takes advantage of the extreme corporate governance problems in the country, considerable variation in corporate governance practices across firms and over time, and presence of a large and exogenously created (during the process of privatization) group of dual class stock companies. The data are assembled from the RTS, SKRIN and SPARK databases and include over 200 firms observed in 1997-2009, with over 1000 observations in total. Our econometric analysis suggests a quadratic relationship between private benefits of control and CEO ownership with a minimum at about 4% CEO ownership, a positive association between CEO tenure and private benefits, and a quadratic in CEO age with a dip in private benefits at about 52 years of age. There is also a quadratic relationship between private benefits of control and board size, implying the optimality of medium-sized (about 9-10 directors) boards. We find no gender effects on private benefits of control.CEO, corporate board, private benefits of control, dual-class stock firms, Russia

DIVIDENDS ON COMMON AND PREFERRED SHARES: THE RELATIONSHIP WITH THE OWNERSHIP CONCENTRATION IN RUSSIAN PUBLIC COMPANIES

This paper investigates the relationship between the dividend policy and ownership structure in Russian public companies. A study of the link between dividends and ownership concentration is based on the sample of public companies with dual class share structure. These shares were traded on the Russian Trading System (RTS) in the period of 2003-2009. The authors explore a broad range of factors related to the ownership concentration. This study allows making conclusions on the impact of the ownership concentration on the dividend policy. Moreover, there is evidence that this impact differs for the dividends on ordinary and preferred shares

Корпоративные конфликты и политика фирм в области занятости и заработной платы

This article studies the link between corporate governance conflicts on the one hand, and employment and wage policies of companies on the other. We use data on publicly traded Russian companies with dual class stock (common and preferred shares), which allows us to use the concept of voting premium for measurement of corporate conflicts and private benefits of control. Our analysis suggests a link between the severity of corporate governance problems between shareholders and managers and the company’s wage policies. In particular, managers who try to consume private benefits and expropriate shareholders, have to resort to more generous policies regarding workers’ wages. Importantly, this link is apparent only in companies with relatively dispersed ownership, in which managers have considerable discretion and are not constrained by obligations before large shareholders. In contrast, the link between extraction of private benefits of control and wage policies is not visible in companies with a majority shareholder

Корпоративные конфликты и политика фирм в области занятости и заработной платы

This article studies the link between corporate governance conflicts on the one hand, and employment and wage policies of companies on the other. We use data on publicly traded Russian companies with dual class stock (common and preferred shares), which allows us to use the concept of voting premium for measurement of corporate conflicts and private benefits of control. Our analysis suggests a link between the severity of corporate governance problems between shareholders and managers and the company’s wage policies. In particular, managers who try to consume private benefits and expropriate shareholders, have to resort to more generous policies regarding workers’ wages. Importantly, this link is apparent only in companies with relatively dispersed ownership, in which managers have considerable discretion and are not constrained by obligations before large shareholders. In contrast, the link between extraction of private benefits of control and wage policies is not visible in companies with a majority shareholder