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Profit or politics? Understanding renationalizations in Russia

  • Chernykh, Lucy
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    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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    File URL: http://www.sciencedirect.com/science/article/pii/S092911991100068X
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    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
    DOI: 10.1016/j.jcorpfin.2011.06.009
    Contact details of provider: Web page: http://www.elsevier.com/locate/jcorpfin

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