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The determinants of board composition in a transforming economy: Evidence from Russia

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  • Iwasaki, Ichiro

Abstract

Using a unique dataset of 730 joint-stock companies, we studied the determinants of corporate board composition in Russia. Despite the widespread image of insider control in the 1990s, a large number of Russian companies now actively appoint outsider directors to monitor top management. The findings reported in this paper strongly suggest that the theories and empirical methods of financial and organizational economics help to pinpoint the factors affecting the extent of outsider directorship. We also found that, among potential determinants, bargaining variables have considerable explanatory power. Furthermore, our empirical evidence demonstrated that Russia's legal system and its peculiarities as a transition economy also exert a certain degree of influence on board composition.

Suggested Citation

  • Iwasaki, Ichiro, 2008. "The determinants of board composition in a transforming economy: Evidence from Russia," Journal of Corporate Finance, Elsevier, vol. 14(5), pages 532-549, December.
  • Handle: RePEc:eee:corfin:v:14:y:2008:i:5:p:532-549
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    Cited by:

    1. Tatiana Dolgopyatova & Alexander Libman & Andrei Yakovlev, 2016. "The Unintended Benefits of Empowering Boards in Conglomerates: The Case Study of Afk Sistema," HSE Working papers WP BRP 49/MAN/2016, National Research University Higher School of Economics.
    2. Iwasaki, Ichiro, 2013. "Global Financial Crisis, Corporate Governance, and Firm Survival: The Russian Experience," RRC Working Paper Series 37, Russian Research Center, Institute of Economic Research, Hitotsubashi University.
    3. Muravyev, Alexander & Berezinets, Irina & Ilina, Yulia, 2014. "The structure of corporate boards and private benefits of control: Evidence from the Russian stock exchange," International Review of Financial Analysis, Elsevier, vol. 34(C), pages 247-261.
    4. Iwasaki, Ichiro, 2014. "Global financial crisis, corporate governance, and firm survival:," Journal of Comparative Economics, Elsevier, pages 178-211.
    5. Carsten Sprenger & Olga Lazareva, 2017. "Corporate Governance and Investment: Evidence from Russian Unlisted Firms," HSE Working papers WP BRP 160/EC/2017, National Research University Higher School of Economics.
    6. repec:eee:ecosys:v:41:y:2017:i:1:p:5-25 is not listed on IDEAS
    7. Berezinets, Irina & Ilina, Yulia & Muravyev, Alexander, 2011. "CEO and Board Characteristics as Determinants of Private Benefits of Control: Evidence from the Russian Stock Exchange," IZA Discussion Papers 6256, Institute for the Study of Labor (IZA).
    8. Iwasaki, Ichiro, 2017. "Corporate Governance System and Regional Heterogeneity: Evidence from East and West Russia," RRC Working Paper Series 72, Russian Research Center, Institute of Economic Research, Hitotsubashi University.
    9. Chauhan, Yogesh & Dey, Dipanjan Kumar & Jha, Rajneesh Ranjan, 2016. "Board structure, controlling ownership, and business groups: Evidence from India," Emerging Markets Review, Elsevier, vol. 27(C), pages 63-83.
    10. Ichiro Iwasaki, 2013. "Firm-Level Determinants of Board System Choice: Evidence from Russia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, pages 636-671.
    11. Munisi, Gibson & Hermes, Niels & Randøy, Trond, 2014. "Corporate boards and ownership structure: Evidence from Sub-Saharan Africa," International Business Review, Elsevier, pages 785-796.
    12. Ichiro Iwasaki, 2015. "Global Financial Crisis, Ownership Change, and Corporate Governance Evolution Firm-Level Evidence from Russia," KIER Working Papers 925, Kyoto University, Institute of Economic Research.
    13. Frye, Timothy M. & Iwasaki, Ichiro, 2011. "Government directors and business–state relations in Russia," European Journal of Political Economy, Elsevier, vol. 27(4), pages 642-658.
    14. repec:eee:touman:v:42:y:2014:i:c:p:342-351 is not listed on IDEAS
    15. Georgeta Vintila & Stefan Cristian Gherghina, 2013. "Board of Directors Independence and Firm Value: Empirical Evidence Based on the Bucharest Stock Exchange Listed Companies," International Journal of Economics and Financial Issues, Econjournals, pages 885-900.
    16. Muravyev, Alexander, 2017. "Boards of directors in Russian publicly traded companies in 1998–2014: Structure, dynamics and performance effects," Economic Systems, Elsevier, pages 5-25.
    17. Iwasaki, Ichiro, 2016. "The Evolution of Corporate Governance in the Global Financial Crisis : The Case of Russian Industrial Firms," CEI Working Paper Series 2016-7, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    18. Alexeev, Michael & Weber, Shlomo (ed.), 2013. "The Oxford Handbook of the Russian Economy," OUP Catalogue, Oxford University Press, number 9780199759927.
    19. Lo, Agnes W.Y. & Wong, Raymond M.K. & Firth, Michael, 2010. "Can corporate governance deter management from manipulating earnings? Evidence from related-party sales transactions in China," Journal of Corporate Finance, Elsevier, vol. 16(2), pages 225-235, April.

    More about this item

    Keywords

    D21 D23 G34 K22 L22 P31 Outsider directorship Board composition Corporate governance Russia;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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