Corporate Governance and Firm Performance in Ukraine
This study investigates the impact of overall level as well as of separate elements of corporate governance on enterprise performance for public companies in Ukraine. We use unique data on corporate governance choices for above 5 thousand firms (around a half of all public companies in Ukraine) for three years from 2000 to 2002. We construct index/sub-indices of corporate governance describing such aspects of corporate governance as shareholder rights, transparency/information disclosure, board independence, chairman independence and ownership arrangements. The novelty of our approach is that we use social trust factors as instruments for corporate governance choices. We use a set of instrumental variables coming mainly from "trust" literature, in particular political diversity, religion and ethnic diversity, and methods of privatisation, to tackle possible endogeneity. We employ ordinary least squares (OLS), two-stage least squares (2SLS), two-stage generalized method of moments (2SGMM), fixed effects (FE), random effects (RE), fixed effects instrumental variables analysis (FE IV) and random effects instrumental variable analysis (RE IV) to analyse the governance effects in the framework of standard production function approach. We find strong evidence that corporate governance predicts firm performance in the transition context. We do not find significant evidence of reverse causation or other endogenous effects. OLS results predict that one-point-increase in our overall corporate governance index would result in around a half-percent increase in performance; and worst to best change in our overall corporate governance index predicts about 40% increase in company's performance. We document statistically and economically strong effects of such governance elements as shareholder rights, transparency and board independence on performance. We also find a negative effect of the independence of the board chairman on performance.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: Edinburgh EH14 4AS|
Phone: +44(0)131 451 3497
Fax: +44(0)131 451 3497
Web page: http://www.sml.hw.ac.uk/research/cert.htm
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shleifer, Andrei & Vishny, Robert W, 1986.
"Large Shareholders and Corporate Control,"
Journal of Political Economy,
University of Chicago Press, vol. 94(3), pages 461-88, June.
- Hart, Oliver, 1995. "Corporate Governance: Some Theory and Implications," Economic Journal, Royal Economic Society, vol. 105(430), pages 678-89, May.
- Leopold Simar & Valentin Zelenyuk, 2006.
"On Testing Equality of Distributions of Technical Efficiency Scores,"
Taylor & Francis Journals, vol. 25(4), pages 497-522.
- Simar, Leopold & Zelenyuk, Valentin, 2004. "On testing equality of distributions of technical efficiency scores," MPRA Paper 28003, University Library of Munich, Germany.
- La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert W., 1998.
"Law and Finance,"
3451310, Harvard University Department of Economics.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," NBER Working Papers 5661, National Bureau of Economic Research, Inc.
- Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, . "Law and Finance," Working Paper 19451, Harvard University OpenScholar.
- Rafael LaPorta & Florencio Lopez de-Silanes & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," Harvard Institute of Economic Research Working Papers 1768, Harvard - Institute of Economic Research.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1997.
"Legal Determinants of External Finance,"
NBER Working Papers
5879, National Bureau of Economic Research, Inc.
- RAFAEL LaPORTA & FLORENCIO LOPEZ-de-SILANES & ANDREI SHLEIFER & ROBERT W. VISHNY, . "Legal Determinants of External Finance,"," CRSP working papers 324, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Rafael LaPorta & Florencio Lopez de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," Harvard Institute of Economic Research Working Papers 1788, Harvard - Institute of Economic Research.
- Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, . "Legal Determinants of External Finance," Working Paper 19443, Harvard University OpenScholar.
- Andreyeva Tatiana, 2003. "Company Performance in Ukraine: What Governs its Success," EERC Working Paper Series 03-01e, EERC Research Network, Russia and CIS.
- Andrei Shleifer & Robert W. Vishny, 1995.
"A Survey of Corporate Governance,"
Harvard Institute of Economic Research Working Papers
1741, Harvard - Institute of Economic Research.
- Léopold Simar & Valentin Zelenyuk, 2007. "Statistical inference for aggregates of Farrell-type efficiencies," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1367-1394.
- Bernard S. Black & Hasung Jang & Woochan Kim, 2006. "Does Corporate Governance Predict Firms' Market Values? Evidence from Korea," Journal of Law, Economics and Organization, Oxford University Press, vol. 22(2), pages 366-413, October.
- Kuznetsov, Pavel & Muravyev, Alexander, 2001.
"Ownership Structure and Firm Performance in Russia: The Case of Blue Chips of the Stock Market,"
27231, University Library of Munich, Germany.
- Kouznetsov Pavel & Muravyev Alexander, 2001. "Ownership Structure and Firm Performance in Russia: The Case of Blue Chips of the Stock Market," EERC Working Paper Series 01-10e, EERC Research Network, Russia and CIS.
- Leopold Simar & Paul Wilson, 2000.
"A general methodology for bootstrapping in non-parametric frontier models,"
Journal of Applied Statistics,
Taylor & Francis Journals, vol. 27(6), pages 779-802.
- Simar, L. & Wilson, P.W., 1998. "A General Methodology for Bootstrapping in Nonparametric Frontier Models," Papers 9811, Catholique de Louvain - Institut de statistique.
- Button, Kenneth J & Weyman-Jones, Thomas G, 1992. "Ownership Structure, Institutional Organization and Measured X-Efficiency," American Economic Review, American Economic Association, vol. 82(2), pages 439-45, May.
- Fare, Rolf & Zelenyuk, Valentin, 2003. "On aggregate Farrell efficiencies," European Journal of Operational Research, Elsevier, vol. 146(3), pages 615-620, May.
- Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
- Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990.
"Production frontiers with cross-sectional and time-series variation in efficiency levels,"
Journal of Econometrics,
Elsevier, vol. 46(1-2), pages 185-200.
- Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1989. "Production Frontiers With Cross-Sectinal And Time-Series Variation In Efficiency Levels," Working Papers 89-18, C.V. Starr Center for Applied Economics, New York University.
- Léopold Simar, 2007.
"How to improve the performances of DEA/FDH estimators in the presence of noise?,"
Journal of Productivity Analysis,
Springer, vol. 28(3), pages 183-201, December.
- Simar, Léopold, 2003. "How to Improve the Performances of DEA/FDH Estimators in the Presence of Noise?," SFB 373 Discussion Papers 2003,33, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Bjørnskov, Christian, 2006. "The Determinants of Trust," Ratio Working Papers 86, The Ratio Institute.
- Francis Fukuyama, 2000. "Social Capital and Civil Society," IMF Working Papers 00/74, International Monetary Fund.
- Brown, J David & Earle, John S, 2000.
"Competition And Firm Performance: Lessons From Russia,"
CEPR Discussion Papers
2444, C.E.P.R. Discussion Papers.
- J. David Brown & John S. Earle, 2000. "Competition and Firm Performance: Lessons from Russia," William Davidson Institute Working Papers Series 296, William Davidson Institute at the University of Michigan.
- 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.
- Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
- Valentin Zelenyuk & Vitaliy Zheka, 2006. "Corporate Governance and Firm’s Efficiency: The Case of a Transitional Country, Ukraine," Journal of Productivity Analysis, Springer, vol. 25(1), pages 143-157, 04.
- Ralph Chami & Connel Fullenkamp, 2002. "Trust As a Means of Improving Corporate Governance and Efficiency," IMF Working Papers 02/33, International Monetary Fund.
- Léopold Simar, 2003. "Detecting Outliers in Frontier Models: A Simple Approach," Journal of Productivity Analysis, Springer, vol. 20(3), pages 391-424, November.
- J. Stiglitz, 1999. "Whither Reform? Ten Years of the Transition," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.
- Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, December.
When requesting a correction, please mention this item's handle: RePEc:hwe:certdp:0605. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Colin Miller)
If references are entirely missing, you can add them using this form.