Self Enforced Mechanisms of Corporate Governance: Evidence from Managerial Turnover in Russia

Managerial entrenchment, an undeveloped market for top managerial labor force and the absence of clear market signals could prevent owners from firing management for poor performance. Top managerial turnover could improve firms’ performance by introducing new human capital and providing good incentives for a new manager if the previous CEO has been fired for poor performance. We evaluate the effectiveness of selfenforced corporate governance mechanisms by determining the causes of top management turnover and estimating consequences of management turnover on the subsequent corporate performance. We track all turnovers of CEO’s in the 110 largest Russian companies during a five year period (from 1997 to 2001) and classify each case of turnover according to the new position of the prior CEO and the origin of the new director.

Ownership concentration in Russian industry

Using a unique dataset built for the World Bank’s Country Economic Memorandum, we find that a relatively small number of tycoons ('oligarchs') control a substantial share of Russia’s economy. Oligarchs seem to run their empires more efficiently than other Russian owners. While the relative weight of their firms in Russian economy is huge, they do not seem to be excessively large by the standards of the global economy where most of them are operating. However, a majority of the Russian population deems their property rights illegitimate, which creates a fundamental problem for building a democratic and prosperous Russia.

The Evolution of Personal Wealth in the Former Soviet Union and Central and Eastern Europe

inequality, wealth distribution, oligarchs, privatization

Corporate Governance, Ownership Structures and Investment in Transition Economies: the Case of Russia, Ukraine and Kyrgyzstan

In this paper we analyze interrelations between ownership structures, corporate governance and investment in three transition countries: Russia, Ukraine and Kyrgyzstan. In contrast to most empirical papers on corporate governance, we study companies with very little exposure to public financial markets. Our empirical analysis is based on two years of data obtained through large-scale surveys of firms. Ukrainian companies appear to have the best corporate governance practices, while Russian companies – the worst. We find that the relationship between ownership concentration and corporate governance is non-linear. In Russia, the relationship between the share of the largest non-state shareholder and corporate governance is either positive or insignificant when the blockholder’s stake is below a certain threshold; however, a further increase in the blockholder’ share is associated with worsening corporate governance. We find a similar effect in Ukraine, but only for managerial ownership. In both countries, corporate governance improves as the combined share of small shareholders grows. No robust effects of the ownership structure are found for Kyrgyz firms. Further we show that the market for corporate control seems to have little relationship to the firms’ corporate governance practices. We find no link between the quality of corporate governance and either the need for outside finance or actual investments financed with outside funds in either of the three countries.corporate governance, transition, ownership structure, investment

A Survey of Corporate Governance in Russia

In this survey, we describe the current state of corporate governance in Russia and discuss its dynamics and prospects. We review the main mechanisms of corporate governance in the country and relate them to firms’ ownership structures, financial market development and government influence. Finally, we discuss the current trends in Russian corporate governance and its prospects.corporate governance, ownership, expropriation, predatory state, property rights

The evolution of personal wealth in the Former Soviet Union and Central and Eastern Europe

This study discusses the evolution of personal wealth in transition economies. While data availability is still a problem, the available indirect evidence suggests privatization has resulted in an increase in personal wealth but also in personal wealth inequality, especially in the countries that lagged behind in building effective institutions. Another source of wealth inequality is the high income inequality due to wage decompression coupled with the low saving rates among the poor. We pay a special attention to one of the most noticeable implications of this rise in personal wealth and wealth inequality— the emergence of so called ‘oligarchs’. Using the comprehensive dataset of Muscovites’ incomes we show that surveys that do not take into account the first- and second-tier rich (billionaires and millionaires) may drastically underestimate inequality. – inequality ; wealth distribution ; oligarchs ; privatizatio

Corporate Governance and Firms' Market Values: Time Series Evidence from Russia

There is increasing evidence that broad measures of firm-level corporate governance predict higher share prices. However, almost all prior work relies on cross-sectional data. This work leaves open the possibility that endogeneity or omitted firm-level variables explain the observed correlations. We address the second possibility by offering time-series evidence from Russia for 1999-present, exploiting a number of available governance indices. We find an economically important and statistically strong correlation between governance and market value in OLS with firm clusters and in firm random effects and firm fixed effects regressions. We also find significant differences in the predictive power of different indices, and in the components of these indices. How one measures governance matters.Russia, corporate governance, corporate governance index, law and finance, firm valuation, disclosure, emerging markets