Financial Architecture and Economic Profit Creation in Russia: Corporate Governance Issue in the Pre-Crisis and Post-Crisis Economy
The paper discusses corporate performance modeling through the integrated conception of corporate financial architecture. We examine the influence of financial architecture based on ownership structure, capital structure and corporate governance over strategic performance of Russian nonfinancial companies. First, we conduct a comparative analysis of different measures for corporate performance using economic profit and Tobin’s Q as dependent variables. Second, we test our model using the unique research database of 70 Russian companies that allowed us to test different dimensions of corporate governance quality and to demonstrate the high correlation between the quality of corporate governance and Russian companies’ performance. Third, we contribute to the challenging issue of exploring the relationship between boards and corporate performance before the global crisis and within the crisis. We contribute to the literature by applying new approach derived from corporate financial architecture concept to economic profit modeling in an emerging market.
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.
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.
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 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 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 present article aims to analyze the degree of diffusion of modern international business ethics practices in Russian enterprises.