Ownership concentration and Russian company development: Empirical evidence
At the time of completion of mass privatization, practically all researchers characterized the shareholdings of Russian firms as dispersed and insiderowned. 1 In the post-privatization period and against the background of the concentration of ownership, the share capital of firms was redistributed from ordinary employees to managers and from work collectives to external owners.
Restrictions on the exercise of property rights under conditions of deep transformational decline and high inflation (nonliquidity of shares, absence of dividends, and also the removal of assets from the firm in the interests of managers or of a few owners) prompted shareholders to concentrate their holdings in order to obtain legitimate control over joint-stock companies.
Subjected to analysis are the notions of conceptual and empirical research, the peculiarities of research in linguistics, the structure of BA and MA theses. The report provides thorough analysis of each part of such a project.
The aim of this review is to classify research papers on major vs. minor shareholders conflicts and ownership concentration. These issues are closely related both to each other and to manager vs. owner conflicts. Ownership concentration is property distribution among shareholders. Ownership concentration studies consider the following questions: how many major and minor shareholders are there in the company; how many inside shareholders are there and if they are minor or major; in what way concentration influences performance of the company; what costs are associated with major vs. minor shareholders conflicts etc. The bond between ownership concentration and manager vs. owner conflict is due to the fact that often managers are major shareholders along with other owners. In such cases incentive hypothesis, entranchement hypothesis, monitoring and control costs, as well as their effect on performance, should be considered together.
The paper describes dynamics of ownership concentration in Russian manufacturing, and factors of the dynamics against the background of economic growth of 2000s. The first signs of stock ownership de-concentration in some companies during 2005-2009 were revealed. Empirical analysis of determinants of changes in concentration was implemented (binary and ordinal regression models). Significant positive factors of this decline are companies’ entry to securities markets, their work in competitive environment, and share of foreign investors. Negative influence of propensity to future investments and of the share of Russian owners was also found out. The study is based on the data of two rounds of monitoring of about 1000 large and medium-sized companies conducted by the Institute for Industrial and Market Studies from HSE in 2005 and 2009.
This paper provides new survey evidence on effects of concentrated ownership on restructuring and performance in privatized firms in Russia. The major findings are that large-block shareholding is negatively associated with the firm's investment and performance, and this relationship does not depend on the identity of controlling shareholders. These results are consistent with the assumption that when minority shareholders' rights are not adequately protected, the entrenched controlling shareholders may be engaged in extracting ‘control premium’ before pro rata distribution of dividends. The issues raised have relevance to other transitional economies where the privatization process has been followed by an increase in ownership concentration.
The paper examines the structure, governance, and balance sheets of state-controlled banks in Russia, which accounted for over 55 percent of the total assets in the country's banking system in early 2012. The author offers a credible estimate of the size of the country's state banking sector by including banks that are indirectly owned by public organizations. Contrary to some predictions based on the theoretical literature on economic transition, he explains the relatively high profitability and efficiency of Russian state-controlled banks by pointing to their competitive position in such functions as acquisition and disposal of assets on behalf of the government. Also suggested in the paper is a different way of looking at market concentration in Russia (by consolidating the market shares of core state-controlled banks), which produces a picture of a more concentrated market than officially reported. Lastly, one of the author's interesting conclusions is that China provides a better benchmark than the formerly centrally planned economies of Central and Eastern Europe by which to assess the viability of state ownership of banks in Russia and to evaluate the country's banking sector.
The paper examines the principles for the supervision of financial conglomerates proposed by BCBS in the consultative document published in December 2011. Moreover, the article proposes a number of suggestions worked out by the authors within the HSE research team.