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

  • Peng, Mike W.
  • Buck, Trevor
  • Filatotchev, Igor
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    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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    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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    1. Sergei Aukutsionek, 1997. "Measuring progress towards a Market economy," Post-Communist Economies, Taylor & Francis Journals, vol. 9(2), pages 141-172.
    2. Stephen Nickell, 1993. "Competition and Corporate Performance," CEP Discussion Papers dp0182, Centre for Economic Performance, LSE.
    3. Jan Svejnar, 2001. "Transition Economies: Performances and Challenges," William Davidson Institute Working Papers Series 415, William Davidson Institute at the University of Michigan.
    4. Simeon Djankov & Peter Murrell, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 739-792, September.
    5. 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.
    6. Saul Estrin, 2002. "Competition and Corporate Governance in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 101-124, Winter.
    7. 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.
    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. Meyer, Klaus E., 2002. "Management challenges in privatization acquisitions in transition economies," Journal of World Business, Elsevier, vol. 37(4), pages 266-276, January.
    10. 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.
    11. 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.
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