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The Influence of Institutional Environment on CEO Succession: Evidence from Russian Companies
This paper presents results of a study on factors influencing owner-CEOs' decisions to cede authority over everyday management to hired CEOs in Russian companies. Using case studies and existing literature, the article proposes hypotheses about variables affecting management succession (management transfer): negative perception of the institutional environment, and compliance of business with legal rules. These hypotheses were tested with data from 500 Russian companies in three industries: HoReCa (hotels, restaurants and cafes), IT-industry, and wholesale and retail trade. The analysis reveals that owner-CEOs' decisions to pass on management to a hired-CEO are affected by such factors as security of property rights, security of contract rights, compliance of firm's practices with legal business rules, and conformity with the hidden economy. Owner-CEOs should consider both the security of their interests as owners and the compliance of current business activities with institutional norms when making the decision to transfer managerial responsibilities.