Economics of Corporate Form: Why Do Russian Firms Prefer to Be Closed Companies?

In Russia, an overwhelming number of joint-stock companies (JSCs) choose to become closed companies despite the fact that this corporate form strays far from the primary nature of stock companies. Using the results of a Japan-Russia joint enterprise survey conducted in 2005, we examine a variety of factors as to why Russian stock companies select to become closed companies. Our empirical results suggest the following four factors encouraging many of Russian firms to be closed JSCs: (a) a widespread insider-dominating corporate ownership structure emerging as a result of the mass-privatization policy; (b) a strong orientation among managers toward closed corporate organization due to the underdeveloped capital and managerial markets; (c) slumping needs for corporate finance; and (d) insufficient financial support from local financial institutions. The empirical relationship between corporate form and ownership structure exists, even if we assume the endogeneity of the two elements.Russia, corporate form, corporate governance, organizational choice

Board Formation and Its Endogeneity: An Empirical Study of Russian Firms

The statistically typical form of the board of directors in a Russian joint-stock corporation can be characterized as an open managerial supervisory body with a balanced membership of executive corporate officers and outsider directors. In reality, however, there are only a very limited number of Russian firms with this "average" type of corporate boards. The vast majority of Russian joint-stock corporations are either governed by a board of directors with an extremely high outsider directorship or completely dominated by insider directors. Behind this polarization in board composition lie heated struggles for supremacy among management, stockholders, and outsider directors. In stark contrast to corporate systems in developed countries, which ensure effective managerial discipline through the spontaneous systemization of a well-balanced corporate governance structure, those in Russia, which are entrenched by deep-seated mutual distrust between insiders and outsiders, tend to cause excessively time- and energy-consuming conflicts. In this sense, the distinctive adaptability of the bargaining model in transitional Russia reflects the underdevelopment of its social and economic system.Russia, board formation, endogeneity, agency theory, bargaining model

Transition Strategies and Economic Performances in the Former Soviet States: A Comparative Institutional View

The objective of this paper is to elucidate the relationship between the reform process and economic performance in the states of the former Soviet Union (FSU). There were two strategies used by the former Soviet states to cope with the collapse of the USSR. Some of the FSU countries, in an effort to overcome the institutional vacuum caused by the disintegration of the federal economy, centralized their government authority to manage industry. Others decentralized power in an attempt to regain economic independence for domestic enterprises. To evaluate the essential differences and progress gaps among transition strategies, FSU countries can be divided into three groups, which reflect variations in institutional control of the government-business relationships. The differences in economic performance in FSU countries can be explained to some extent by examining the diversity of institutional patterns that characterize each category. The results of various empirical analyses positively support the validity of such an analytical framework. In this sense, this paper presents a new viewpoint on the transition process in FSU countries that may complement that shown in existing literature.transition, government-business relationship, the Former Soviet Union

Self-Sustained Turbulence without Dynamical Forcing: A Two-Dimensional Study of a Bistable Interstellar Medium

In this paper, the nonlinear evolution of a bistable interstellar medium is investigated using two-dimensional simulations with a realistic cooling rate, thermal conduction, and physical viscosity. The calculations are performed using periodic boundary conditions without any external dynamical forcing. As the initial condition, a spatially uniform unstable gas under thermal equilibrium is considered. At the initial stage, the unstable gas quickly segregates into two phases, or cold neutral medium (CNM) and warm neutral medium (WNM). Then, self-sustained turbulence with velocity dispersion of $0.1-0.2\;\mathrm{km\;s^{-1}}$ is observed in which the CNM moves around in the WNM. We find that the interfacial medium (IFM) between the CNM and WNM plays an important role in sustaining the turbulence. The self-sustaining mechanism can be divided into two steps. First, thermal conduction drives fast flows streaming into concave CNM surfaces towards the WNM. The kinetic energy of the fast flows in the IFM is incorporated into that of the CNM through the phase transition. Second, turbulence inside the CNM deforms interfaces and forms other concave CNM surfaces, leading to fast flows in the IFM. This drives the first step again and a cycle is established by which turbulent motions are self-sustained.Comment: 14 pages, 15 figures, accepted by The Astrophysical Journa

Organizational Culture and Corporate Governance in Russia : A Study of Managerial Turnover

In this paper, we investigate the possible impacts of ownership structure and corporate performance on managerial turnover using a unique dataset of Russian corporations. We argue that Russia is regarded as a country with a highly authoritarian and collectivism-oriented national culture and this peculiarity is the key to disentangling the puzzle of the statistically weaker relationship between firm performance and CEO renewal in Russian firms. Standing on this viewpoint, we deal with not only CEO dismissal, but also managerial turnover within a company as a whole. By conducting multinomial analysis that incorporates both factors, we found significant relationship between firm performance and CEO dismissal, while, consistent with most previous studies, a standard logit analysis of CEO turnover revealed no clear relationships. We also found that the presence of a dominant shareholder significantly increases the likelihood of turnover of whole management team, while foreign ownership tends to cause partial (CEO only) turnover. Our empirical result is consistent with the "cultural view" of management practice as put forward by House et al. (2004).organizational culture, corporate governance, managerial turnover, Russia

Private Pension Funds in Hungary: Politics, Institutions, and Performance

The new pension system launched in Hungary in 1998 is epoch-making for having introduced a mandatory private pension scheme (MPPS). However, the political decision-making on pension reform and the scheme operations have been greatly influenced by conflicts of interests among ministries, political conflicts between parties, and the presence of special interest groups, including trade unions and financial institutions. This situation may have had a certain negative influence on the legal framework of the MPPS and on the management performance of private pension funds. In order for the MPPS to be sustainable in the future and to make insurance beneficiary profits a top priority, the corporate governance reform of pension funds and reinforcement of the monitoring system over them, and political neutralization of the public pension system are necessary.

The Determinants of Corruption in Transition Economies

This paper examines the determinants of corruption in transition economies.We found that the progress of structural reform, comprising marketization, rule of law, and democratization had a crucial impact on the extent of corruption control in former socialist countries.transition economies, corruption, marketization, rule of law, democratization

Gravitational Fragmentation of Expanding Shells. I. Linear Analysis

We perform a linear perturbation analysis of expanding shells driven by expansions of HII regions. The ambient gas is assumed to be uniform. As an unperturbed state, we develop a semi-analytic method for deriving the time evolution of the density profile across the thickness. It is found that the time evolution of the density profile can be divided into three evolutionary phases, deceleration-dominated, intermediate, and self-gravity-dominated phases. The density peak moves relatively from the shock front to the contact discontinuity as the shell expands. We perform a linear analysis taking into account the asymmetric density profile obtained by the semi-analytic method, and imposing the boundary conditions for the shock front and the contact discontinuity while the evolutionary effect of the shell is neglected. It is found that the growth rate is enhanced compared with the previous studies based on the thin-shell approximation. This is due to the boundary effect of the contact discontinuity and asymmetric density profile that were not taken into account in previous works.Comment: 13 pages, 13 figures, to be published in the Astrophysical Journa