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Corporate governance and firm performance in Russia: an empirical study

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  • Judge, William Q.
  • Naoumova, Irina
  • Koutzevol, Nadejda
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    Abstract

    Using the agency and institutional perspectives, this study advances several hypotheses about the board structure-firm performance relationship within Russia. We tested these hypotheses using survey data. Despite a relatively small sample size, predictions from both theoretical perspectives were supported. Specifically, we found a negative relationship between "informal" CEO duality and firm performance. This finding is noteworthy given the 1996 Russian Federal law which prohibits the CEO from also serving as board chair. Also, we found that the more vigorously the firm pursues a retrenchment strategy, the more negative the relationship between proportion of inside directors and firm performance. Overall, these findings suggest that effective corporate governance may be essential to firm performance in Russia.

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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: 385-396

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    Handle: RePEc:eee:worbus:v:38:y:2003:i:4:p:385-396

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    Related research

    Keywords: Russia Firm performance CEO duality Board composition Retrenchment;

    References

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    1. Dan R Dalton & Idalene F Kesner, 1987. "Composition and CEO Duality in Boards of Directors: An International Perspective," Journal of International Business Studies, Palgrave Macmillan, vol. 18(3), pages 33-42, September.
    2. Gregory Maassen & Frans van den Bosch, 1999. "On the Supposed Independence of Two-tier Boards: formal structure and reality in the Netherlands," Corporate Governance: An International Review, Wiley Blackwell, vol. 7(1), pages 31-37, 01.
    3. Band, David, 1992. "Corporate governance: Why agency theory is not enough," European Management Journal, Elsevier, vol. 10(4), pages 453-459, December.
    4. 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.
    5. Enrique Rueda-Sabater, 2000. "Corporate Governance: And the Bargaining Power of Developing Countries to Attract Foreign Investment," Corporate Governance: An International Review, Wiley Blackwell, vol. 8(2), pages 117-124, 04.
    6. Jiahua Che & Yingyi Qian, . "Insecure Property Rights and Government Ownership of Firms," Working Papers 97050, Stanford University, Department of Economics.
    7. James Gillies & Jaak Leimann & Rein Peterson, 2002. "Making a Successful Transition from a Command to a Market Economy: the lessons from Estonia," Corporate Governance: An International Review, Wiley Blackwell, vol. 10(3), pages 175-186, 07.
    8. Peter Clifford & Robert Evans, 1997. "Non-Executive Directors: A Question of Independence," Corporate Governance: An International Review, Wiley Blackwell, vol. 5(4), pages 224-231, October.
    9. Chris Mallin, 2000. "Developments in Corporate Governance in Central and Eastern Europe," Corporate Governance: An International Review, Wiley Blackwell, vol. 8(1), pages 43-51, 01.
    10. Dawna L. Rhoades & Paula L. Rechner & Chamu Sundaramurthy, 2001. "A Meta-analysis of Board Leadership Structure and Financial Performance: are "two heads better than one"?," Corporate Governance: An International Review, Wiley Blackwell, vol. 9(4), pages 311-319, October.
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    Cited by:
    1. 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.
    2. 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.
    3. Yahya Ali Al-Matari & Abdullah Kaid Al-Swidi & Faudziah Hanim Bt Fadzil & Ebrahim Mohammed Al-Matari, 2012. "Board of Directors, Audit Committee Characteristics and Performance of Saudi Arabia Listed Companies," International Review of Management and Marketing, Econjournals, vol. 2(4), pages 241-251.
    4. Adegbite, Emmanuel & Amaeshi, Kenneth & Nakajima, Chizu, 2013. "Multiple influences on corporate governance practice in Nigeria: Agents, strategies and implications," International Business Review, Elsevier, vol. 22(3), pages 524-538.
    5. 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.

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