Impact of Market Timing on the Capital Structure of Russian Companies
Prior research on market timing theory in relation to developing markets only analyzes equity issuance and provides contradictory results. Using a sample of large Russian companies in nonfinancial sectors between 2008 and 2015, this paper analyzes both equity and debt market timing to explore the impact of market timing on firms’ capital structure. To test the robustness of the results, we use several proxies for both timing types and include Russian-specific control variables of corporate governance and ownership. The results show that Russian companies time the debt market to attract extra capital if the value of the interest rate in the current period is lower than the rates in previous periods. The net debt issued decreases when interest rates are high, which indicates debt market timing. Consistent with previous studies, we find that Russian companies do not time the equity market. Added corporate governance factors suggest that younger boards of directors prefer debt financing to equity issuance, as well as more experienced ones. State ownership is negatively connected with leverage.
This article discusses the objectives and challenges for corporate governance of SOEs in Russia, and provides an international perspective of the performance of SOEs as compared to privately owned companies. Recent trends in the policy and management of state property are described. The problems of corporate governance in Russia are described in an agency perspective, and survey evidence on corporate governance and transparency of Russian SOEs is provided. Particular attention is given to the legal construction of the state corporation. The final section on the performance effects of state ownership summarizes the key contributions in the international economic literature in this field.
The Working Paper examines the peculiarities of the Russian model of corporate governance and control in the banking sector. The study relies upon theoretical as well as applied research of corporate governance in Russian commercial banks featuring different forms of ownership. We focus on real interests of all stakeholders, namely bank and stock market regulators, bank owners, investors, top managers and other insiders. The Anglo-American concept of corporate governance, based on agency theory and implying outside investors’ control over banks through stock market, is found to bear limited relevance. We suggest some ways of overcoming the gap between formal institutions of governance and the real life.
The chapter describes the current state of corporate governance in Russia and the dynamics of recent years. Important features of the environment that affect corporate governance include weak legal institutions that lead to high private benefits to control, underdeveloped capital markets, high levels of ownership concentration and significant state involvement in business. In this situation, the main conflict of interest is not between a manager and a large number of dispersed shareholders, but between large and small shareholders, between different large shareholders, and between minority shareholders and managers/board members in state-owned companies. Many of these features are very similar to other emerging markets, but substantially different from conditions faced by firms in developed countries. Despite substantial improvement during the 2000s, the quality of corporate governance in Russia is still much lower than in developed countries, primarily because of the low quality of Russian institutions.
The main purpose of this monograph is to identify the key factors of risk man- agement efficiency of firm, whose management is able to increase the investment attractiveness of the business in general, as well as the formation of an effective or- ganizational risk management model that allows, on the one hand - to provide reliable protection for companies against unexpected losses, on the other hand - to make a risk management tool for the creation of corporate value. This monograph presents the organization of risk management in accordance with the latest regulatory require- ments. In the monograph authors provide a developed methods for evaluating the effectiveness of existing mechanisms of risk management, based on a representative theoretical review of the scientific literature of leading researchers in the field of risk management and internal control. In addition, an algorithm for evaluating the econom- ic and investment efficiency of the risk management is given, that takes into account the existing methods of performance evaluation, as well as recommendations on the organization of internal compliance as a tool ensuring the consistency of individual and corporate interests of the company. Most of the conclusions and positions pre- sented in the book, confirmed by empirical calculations on the example of Russian and international companies.
This book is about twenty-year's experience of privatization in different countries including Russia. The book also includes sestematozation of academic views at the problems of state failures and effectiveness of the state owership.
This study examines the development of the board of directors institution in Russian companies. The purpose of the paper is to determine the stages of the evolution of the board role in Russia and to evaluate the further perspectives of this institution. Therewith we detect the stages according to the change of the board of directors role in Russian companies. Moreover we demonstrate the system of factors (institutional, legal, human, economic, factors of corporate sector) that influences the transformation of the board’s role. Studies of specialists in the field of corporate governance and the updating of the corporate law form the informational base of the paper.
In the paper some prominent features of a modern financial system are studied using the model of leverage dynamics. Asset securitization is considered as a major factor increasing aggregate debt and hence systems uncertainty and instability. A simple macrofinancial model includes a logistic equation of leverage dynamics that reveals origins of a financial bubble, thus corresponding closely to the Minsky financial instability hypothesis. Using ROA, ROE, and the interest rate as parameters, the model provides wide spectrum of leverage and default probability trajectories for the short and long run.
This paper aims at explaining the differences in valuation of banking firms in Russia through the impact of selected elements of corporate governance. We rely upon value-based management theory to test the hypothesis that expenses on corporate governance system create shareholder value. The price at which share stakes are acquired by strategic foreign investors is for us a criterion of market-proven value, so we use the standard valuation tool, i.e. price-to-book-value of equity (P/BV) multiple, as the dependent variable. The set of corporate governance parameters whose materiality for a would-be external investor we would like to test includes: the degree of concentration of ownership and control; maturity of corporate governing bodies; degree of Board independence; qualification of external auditors; stability of governing bodies (Management Board and Board of Directors); and availability of external credit ratings from the world’s leading rating agencies. We test our approach on a sample of acquisition deals and public offerings over the period 2004-2008 that we develop for the first time. Firstly, we find out which factors are statistically significant and relevant to a bank’s selling price. Secondly, a least squares multiple linear regression model is devised to check how each individual variable impacts the dependent variable. We discover that external investors attach value to high concentration of ownership, external credit rating coverage, stability of the Board of Directors, and involvement of well-established external auditors. Investors of a strategic nature tend to pay a higher acquisition premium. Independence of the Board of Directors might be perceived by external strategic investors as a disadvantage and might destroy shareholder value.
The present article aims to analyze the degree of diffusion of modern international business ethics practices in Russian enterprises.