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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

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.

Suggested Citation

  • Peng, Mike W. & Buck, Trevor & Filatotchev, Igor, 2003. "Do outside directors and new managers help improve firm performance? An exploratory study in Russian privatization," Journal of World Business, Elsevier, vol. 38(4), pages 348-360, November.
  • Handle: RePEc:eee:worbus:v:38:y:2003:i:4:p:348-360
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    References listed on IDEAS

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    1. Trevor Buck, 1998. "Agents, Stakeholders and Corporate Governance in Russian Firms," Journal of Management Studies, Wiley Blackwell, vol. 35(1), pages 81-104, January.
    2. Saul Estrin, 2002. "Competition and Corporate Governance in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 101-124, Winter.
    3. Meyer, Klaus E., 2002. "Management challenges in privatization acquisitions in transition economies," Journal of World Business, Elsevier, vol. 37(4), pages 266-276, January.
    4. Simeon Djankov & Peter Murrell, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," Journal of Economic Literature, American Economic Association, pages 739-792.
    5. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    6. Barberis, Nicholas & Maxim Boycko & Andrei Shleifer & Natalia Tsukanova, 1996. "How Does Privatization Work? Evidence from the Russian Shops," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 764-790, August.
    7. 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.
    8. Sergei Aukutsionek, 1997. "Measuring progress towards a Market economy," Post-Communist Economies, Taylor & Francis Journals, vol. 9(2), pages 141-172.
    9. Jan Svejnar, 2002. "Transition Economies: Performance and Challenges," Journal of Economic Perspectives, American Economic Association, pages 3-28.
    10. 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, Oxford University Press, vol. 114(4), pages 1153-1191.
    11. 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.
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    Citations

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    Cited by:

    1. 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.
    2. repec:spr:manint:v:52:y:2012:i:6:d:10.1007_s11575-012-0148-x is not listed on IDEAS
    3. Yangmin Kim, 2007. "The Proportion and Social Capital of Outside Directors and Their Impacts on Firm Value: evidence from Korea," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1168-1176, November.
    4. 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.
    5. Muravyev, Alexander, 2017. "Boards of directors in Russian publicly traded companies in 1998–2014: Structure, dynamics and performance effects," Economic Systems, Elsevier, vol. 41(1), pages 5-25.
    6. 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.
    7. Gloria Cuevas-Rodriguez & Jaime Guerrero-Villegas & Ramón Valle-Cabrera, 2014. "Privatization effects on corporate governance, strategy and compensation systems," Working Papers 14.03, Universidad Pablo de Olavide, Department of Business Organization and Marketing (former Department of Business Administration).
    8. 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.
    9. Amna Obeid & Sheela Devi Sundarasen, 2017. "Board Structure and Performance of Government-linked and Non-government-linked Companies: A Comparative Study of Selected Listed Companies’ in Malaysia, India and Singapore," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 442-447.
    10. 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.
    11. Muravyev, Alexander & Berezinets, Irina & Ilina, Yulia, 2012. "Корпоративные Конфликты И Политика Фирм В Области Занятости И Заработной Платы
      [Corporate Governance Conflicts and Employment and Wage Policies of Companies]
      ," MPRA Paper 40215, University Library of Munich, Germany.
    12. 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.
    13. 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.
    14. 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.
    15. repec:eee:worbus:v:52:y:2017:i:5:p:628-639 is not listed on IDEAS
    16. repec:spr:manint:v:49:y:2009:i:4:d:10.1007_s11575-009-0004-9 is not listed on IDEAS

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