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Profit or politics? Understanding renationalizations in Russia

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  • Chernykh, Lucy
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    Abstract

    This study examines firm-level determinants of the government incentives to acquire controlling stakes in private companies. Using a novel hand-collected dataset of 153 largest listed and unlisted Russian companies, I investigate the methods and the rationales of a 2004–2008 wave of selected nationalizations in a post-privatization market. I find robust evidence that formerly privatized and domestically-owned companies in strategically important sectors face the highest risks of corporate control transfers from private to state hands. I also find that the corporate tax evasion is another significant determinant of a firm nationalization. Contrary to commonly held beliefs, there is little evidence that renationalizations in Russia are driven by firm profitability factors: the government neither systematically “cherry-picks” best performers nor addresses market failures by rescuing national champions in financial distress. These results contribute to t'he politics and finance literature by providing new firm-level evidence on the importance of strategic nationalism in the government's decision to intervene into the corporate control structures.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Corporate Finance.

    Volume (Year): 17 (2011)
    Issue (Month): 5 ()
    Pages: 1237-1253

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    Handle: RePEc:eee:corfin:v:17:y:2011:i:5:p:1237-1253

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    Web page: http://www.elsevier.com/locate/jcorpfin

    Related research

    Keywords: Nationalization; Political economy; National champions; Strategic sectors; Russia;

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    Cited by:
    1. Stefano CLÒ & Chiara F. DEL BO & Matteo FERRARIS & Carlo FIORIO & Massimo FLORIO & Daniela VANDONE, 2014. "Publicization versus Privatization: Recent Worldwide Evidence," Departmental Working Papers 2014-04, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Alexeev, Michael & Weber, Shlomo (ed.), 2013. "The Oxford Handbook of the Russian Economy," OUP Catalogue, Oxford University Press, number 9780199759927, September.
    3. Tsatsos, Aristidis, 2012. "Die Liberalisierung des russischen Gassektors: 3 Szenarios?
      [The liberalisation of the Russian gas sector: 3 scenarios?]
      ," MPRA Paper 44623, University Library of Munich, Germany.
    4. Victor DRAGOTA & Carmen LIPARA & Radu CIOBANU, 2013. "Agency Problems and Synergistic Effects in Romania: The Determinants of the Control Premium," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 63(2), pages 197-219, May.

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