The Development and Challenges of Russian Corporate Governance I: The Roles and Functions of Boards of Directors

by Oksana Kim, Sheila M. Puffer (Foreword by)

Overview

Despite increasing attention toward Russia’s economy and capital market, corporate governance norms of Russian public firms are rarely analyzed. This project presents and interprets evidence regarding various governance practices followed by Russian firms covering almost the entire period of the existence of the Russian stock market. Its findings run counter to some widely held beliefs according to which Russia is a country with high resistance to corporate innovations due to socialist legacies.

Part one of this two-volume study focuses on the role that boards of directors play in reducing intra-corporate agency conflicts. Russian companies have adopted progressive governance mechanisms including director independence, nationality and gender diversity on the board, dismissal of poorly performing CEOs, and cross-listing of companies on foreign markets with stringent reporting obligations. Some of these innovations have had notably positive impact on firms’ performances and market valuation. Others, such as nationality diversity on boards of directors, enhanced the image of Russian companies but made little contribution toward improving internal governance. Unresolved issues impeding further progress include limited liability of directors before shareholders due to imperfections of the Russian legal system, a taboo on disclosures of executives’ compensations, and generally high risks of conducting business in Russia. Despite impressive improvements in internal practices, Russian firms still have a long way to go to achieve the governance levels of their peers in developed countries.

Product Details

ISBN-13:	9783838212876
Publisher:	ibidem Press
Publication date:	05/07/2019
Series:	Soviet and Post-Soviet Politics and Society
Pages:	130
Product dimensions:	5.83(w) x 8.27(h) x (d)

About the Author

Oksana Kim is associate professor of accounting at Minnesota State University, Mankato. She studied economics and management at Moscow, Bloomington, as well as Melbourne, and worked as an auditor for Deloitte and Ernst & Young. Since 2013, Kim has served on the editorial board of The International Journal of Accounting. Her papers have appeared in, among other journals, Accounting and Business Research, Journal of Multinational Financial Management, and Journal of Contemporary Accounting and Economics.

Sheila M. Puffer is Distinguished Professor of International Business and Strategy at the D’Amore McKim School of Business at Northeastern University in Boston.

Table of Contents

List of Tables 11

List of Figures 13

Foreword Sheila M. Puffer 15

Chapter 1 Introduction 17

Chapter 2 Corporate governance laws and regulations in Russia: overview and dynamics 29

2.1 National stock exchanges 29

2.2 Laws and regulations outlining the major corporate governance provisions 46

2.3 Accounting standards and reporting requirements. Adoption of IFRS 53

2.4 Implications of the corporate governance reforms for the Russian stock market 58

2.5 Conclusions 62

Chapter 3 Board of directors' structure and composition: one- versus two-tier boards 63

3.1 Unitary versus two-tier board structure: overview of the major differences and global practices 63

3.2 Russian public companies' choice to adopt a unitary versus a two-tier board model 72

3.2.1 Data collection process 73

3.2.2 Empirical examination of the impact of the board of directors' structure on a firm's performance and value 85

3.3 Conclusions 93

Chapter 4 Cross-listing practices of Russian companies 95

4.1 Reasons to cross-list. Overview of cross-listing theories and empirical findings 95

4.2 Cross-listing practices of Russian companies 99

4.3 Determinants of cross-listing 110

4.4 The impact of cross-listing on a firm's performance and value 113

4.5 Conclusions 115

Chapter 5 Nationality diversity on the board of directors of Russian firms 117

5.1 Pros and cons of hiring diverse boards. Literature overview 117

5.2 Foreign accounting/consulting firms and foreign directors: Russian firms' practices 120

5.3 Implications of hiring foreign nationals on the board of directors 123

5.3.1 Summary statistics. Comparison of covariates 123

5.3.2 Foreign directors' impact on the monitoring and advisory functions of the board 129

5.4 Conclusions 138

Chapter 6 Gender diversity on the board of directors of Russian public companies 141

6.1 Benefits and costs of maintaining gender-diverse boards. Global evidence and literature overview 141

6.2 Female representation on Russian corporate boards 144

6.2.1 Summary statistics. Comparison of covariates 144

6.2.2 The impact of female directors on a firm's performance and value. Mechanisms through which female directors contribute towards the board's activities 151

6.3 Conclusions 156

Chapter 7 CEO performance-induced turnover 159

7.1 CEO turnover and a firm's performance. Empirical evidence 159

7.2 CEO performance-turnover sensitivity among Russian public companies 162

7.3 Conclusions 165

Chapter 8 Unresolved issues and concluding remarks 167

Concluding remarks 170

Bibliography 171

Editorial Reviews

There still is a lack of understanding about the Russian economy in general and Russia’s corporate governance in particular. This book is a welcome addition to a series of literature focusing on how Russian corporate governance works in practice.

Yuko Adachi