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Do outside directors and new managers help improve firm performance? An exploratory study in Russian privatization

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  • Peng, Mike W.
  • Buck, Trevor
  • Filatotchev, Igor
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    Abstract

    In the context of privatization and restructuring in Russia, we test two standard agency theory hypotheses, namely, (1) outside board members and (2) new managers are positively related to firm performance. Based on a survey of 314 privatized firms, the evidence offers little support for the hypotheses. Historically, results refuting theories have been launch pads for scientific progress. Our findings, therefore, raise interesting questions about whether the underlying theory is appropriate, whether there are methodological problems, or whether there are institutional factors in Russia's transition economy that need to be accounted for when we test agency theory in a new setting. We address these questions and discuss their implications for corporate governance theory, practice, and public policy.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of World Business.

    Volume (Year): 38 (2003)
    Issue (Month): 4 (November)
    Pages: 348-360

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    Handle: RePEc:eee:worbus:v:38:y:2003:i:4:p:348-360

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    Keywords: Outside directors New managers Firm performance Russia Privatization;

    References

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    1. Meyer, Klaus E., 2002. "Management challenges in privatization acquisitions in transition economies," Journal of World Business, Elsevier, vol. 37(4), pages 266-276, January.
    2. Nickell, S.J., 1993. "Competition and Crporate Performance," Economics Series Working Papers 99155, University of Oxford, Department of Economics.
    3. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
    4. Jan Svejnar, 2002. "Transition Economies: Performance and Challenges," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 3-28, Winter.
    5. Djankov, Simeon & Murrell, Peter, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," CEPR Discussion Papers 3319, C.E.P.R. Discussion Papers.
    6. Barberis, Nicholas & Boycko, Maxim & Shleifer, Andrei & Tsukanova, Natalia, 1996. "How Does Privatization Work? Evidence from the Russian Shops," Scholarly Articles 3451306, Harvard University Department of Economics.
    7. Roman Frydman & Cheryl Gray & Marek Hessel & Andrzej Rapaczynski, 1999. "When Does Privatization Work? The Impact Of Private Ownership On Corporate Performance In The Transition Economies," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1153-1191, November.
    8. Trevor Buck, 1998. "Agents, Stakeholders and Corporate Governance in Russian Firms," Journal of Management Studies, Wiley Blackwell, vol. 35(1), pages 81-104, 01.
    9. Sergei Aukutsionek, 1997. "Measuring progress towards a Market economy," Post-Communist Economies, Taylor & Francis Journals, vol. 9(2), pages 141-172.
    10. Saul Estrin, 2002. "Competition and Corporate Governance in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 101-124, Winter.
    11. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
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    Cited by:
    1. Lu, Jiangyong & Xu, Bin & Liu, Xiaohui, 2007. "The Effects of Corporate Governance and Institutional Environments on Export Behaviour: Evidence from Chinese Listed Firms," MPRA Paper 6600, University Library of Munich, Germany.
    2. Ciprian Stan & Mike Peng & Garry Bruton, 2014. "Slack and the performance of state-owned enterprises," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 473-495, June.
    3. Ichiro Iwasaki, 2007. "Enterprise Reform And Corporate Governance In Russia: A Quantitative Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 21(5), pages 849-902, December.
    4. Lau, Chung-Ming & Fan, Dennis K.K. & Young, Michael N. & Wu, Shukun, 2007. "Corporate governance effectiveness during institutional transition," International Business Review, Elsevier, vol. 16(4), pages 425-448, August.
    5. Melkumov, Dmitri, 2009. "Institutional background as a determinant of boards of directors' internal and external roles: The case of Russia," Journal of World Business, Elsevier, vol. 44(1), pages 94-103, January.
    6. Andreas Heinrich & Aleksandra Lis & Heiko Pleines, 2007. "Factors Influencing Corporate Governance in post-Socialist Companies: an Analytical Framework," William Davidson Institute Working Papers Series wp896, William Davidson Institute at the University of Michigan.
    7. McCarthy, Daniel J. & Puffer, Sheila M., 2003. "Corporate governance in Russia: a framework for analysis," Journal of World Business, Elsevier, vol. 38(4), pages 397-415, November.
    8. Muravyev, Alexander & Berezinets, Irina & Ilina, Yulia, 2012. "Корпоративные Конфликты И Политика Фирм В Области Занятости И Заработной Платы
      [Corporate Governance Conflicts and Employment and
      ," MPRA Paper 40215, University Library of Munich, Germany.

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