Evaluation of Operational Management and Corporate Governance Quality in State-Owned Enterprises in Russia

The chapter examines the practice of corporate governance in Russian state-owned enterprises from the perspective of applying instructional guidelines of the Federal Agency for State Property Management in order to improve operational management and corporate governance in such enterprises. The authors study the system of documents for strategic planning of public and non-public state-owned enterprises, recommended by the Federal Agency for State Property Management. The system of financial and economic performance indicators (KPI) and bonus reduction indicators for companies with state participation is considered. The paper reviews in detail the content of indicators (KPI) for evaluating the quality of operational management of non-public and public state-owned enterprises, recommended by the instructional guidelines of the Federal Agency for State Property Management. The KPI system recommended by Federal Agency for State Property Management is the basis of motivation and management reward systems for this type of companies. The authors also review indicators for evaluating the quality of corporate governance in state-owned enterprises recommended by the same Federal Agency. Further, the authors present the results of the corporate governance evaluation of the 13 largest Russian state-owned enterprises. The main results of the study are the following: 1. the distinctive features of the quality evaluation of the operational management and corporate governance of public and non-public state-owned enterprises were determined; 2. underestimated overviews of investors about the quality of corporate governance in Russian state-owned enterprises were revealed. Investors’ perceptions of the quality of corporate governance do not coincide with the results of enterprises’ evaluation by experts of the Russian Institute of Directors that calculate the National Corporate Governance Rating (NCGR).