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Board Formation and Its Endogeneity: An Empirical Study of Russian Firms


  • Iwasaki, Ichiro


The statistically typical form of the board of directors in a Russian joint-stock corporation can be characterized as an open managerial supervisory body with a balanced membership of executive corporate officers and outsider directors. In reality, however, there are only a very limited number of Russian firms with this "average" type of corporate boards. The vast majority of Russian joint-stock corporations are either governed by a board of directors with an extremely high outsider directorship or completely dominated by insider directors. Behind this polarization in board composition lie heated struggles for supremacy among management, stockholders, and outsider directors. In stark contrast to corporate systems in developed countries, which ensure effective managerial discipline through the spontaneous systemization of a well-balanced corporate governance structure, those in Russia, which are entrenched by deep-seated mutual distrust between insiders and outsiders, tend to cause excessively time- and energy-consuming conflicts. In this sense, the distinctive adaptability of the bargaining model in transitional Russia reflects the underdevelopment of its social and economic system.

Suggested Citation

  • Iwasaki, Ichiro, 2007. "Board Formation and Its Endogeneity: An Empirical Study of Russian Firms," CEI Working Paper Series 2007-1, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:hitcei:2007-1 Note: First Draft April, 2007

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    References listed on IDEAS

    1. Anil Shivdasani & David Yermack, 1999. "CEO Involvement in the Selection of New Board Members: An Empirical Analysis," Journal of Finance, American Finance Association, vol. 54(5), pages 1829-1853, October.
    2. 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.
    3. Prevost, Andrew K. & Rao, Ramesh P. & Hossain, Mahmud, 2002. "Determinants of board composition in New Zealand: a simultaneous equations approach," Journal of Empirical Finance, Elsevier, vol. 9(4), pages 373-397, November.
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    5. Abe, Naohito & Dolgopyatova, Tatiana G. & Iwasaki, Ichiro, 2007. "The Internal Control System of Russian Corporations," Discussion Paper Series b36, Institute of Economic Research, Hitotsubashi University.
    6. Brickley, James A. & Coles, Jeffrey L. & Jarrell, Gregg, 1997. "Leadership structure: Separating the CEO and Chairman of the Board," Journal of Corporate Finance, Elsevier, vol. 3(3), pages 189-220, June.
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    Cited by:

    1. Vernikov, Andrei, 2007. "Corporate governance and control in Russian banks," MPRA Paper 10028, University Library of Munich, Germany.

    More about this item


    Russia; board formation; endogeneity; agency theory; bargaining model;

    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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