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The Structure of Corporate Boards and Private Benefits of Control: Evidence from the Russian Stock Exchange

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  • Muravyev, Alexander A.
  • Berezinets, Irina V.
  • Ilina, Yulia B.

Abstract

This paper revisits the role of board size and composition in corporate governance using a measure of private benefits of control (PBC) as indicator of governance problems in firms. We calculate PBC using the voting premium approach for a sample of dual class stock companies traded on the Russian stock exchange between 1998 and 2009. Using fixedeffects regressions, we find a quadratic relationship between PBC and board size, implying the optimality of medium-sized (about 11 directors) supervisory boards. This result is substantially stronger for PBC than for traditional measures of corporate performance. There is also some evidence that director ownership helps mitigate governance problems. Most remarkably, we find that non-executive/independent directors are associated with larger PBC and thus do not seem to help improve corporate governance. In contrast, regressions with accounting performance measures as dependent variables tend to suggest a positive role of these directors in corporate governance.

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  • Muravyev, Alexander A. & Berezinets, Irina V. & Ilina, Yulia B., 2013. "The Structure of Corporate Boards and Private Benefits of Control: Evidence from the Russian Stock Exchange," Working Papers 789, Graduate School of Management, St. Petersburg State University.
  • Handle: RePEc:sps:wpaper:789
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    1. repec:taf:pocoec:v:30:y:2018:i:3:p:290-333 is not listed on IDEAS
    2. Ichiro IWASAKI & Satoshi MIZOBATA, 2018. "Post-Privatization Ownership And Firm Performance: A Large Meta-Analysis Of The Transition Literature," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(2), pages 263-322, June.
    3. Carsten Sprenger & Olga Lazareva, 2017. "Corporate Governance and Investment: Evidence from Russian Unlisted Firms," HSE Working papers WP BRP 160/EC/2017, National Research University Higher School of Economics.
    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. Ichiro Iwasaki, 2015. "Global Financial Crisis, Ownership Change, and Corporate Governance Evolution Firm-Level Evidence from Russia," KIER Working Papers 925, Kyoto University, Institute of Economic Research.
    7. Iwasaki, Ichiro & Mizobata, Satoshi, 2018. "Ownership Concentration and Firm Performance in European Emerging Economies: A Meta-Analysis," CEI Working Paper Series 2018-8, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    8. repec:nms:joeems:10.5771/0949-6181-2018-2-177 is not listed on IDEAS
    9. Ichiro Iwasaki & Satoshi Mizobata & Alexander Muravyev, 2018. "Ownership dynamics and firm performance in an emerging economy: a meta-analysis of the Russian literature," Post-Communist Economies, Taylor & Francis Journals, vol. 30(3), pages 290-333, May.
    10. Tatiana Dolgopyatova & Alexander Libman & Andrei Yakovlev, 2016. "The Unintended Benefits of Empowering Boards in Conglomerates: The Case Study of Afk Sistema," HSE Working papers WP BRP 49/MAN/2016, National Research University Higher School of Economics.
    11. Berezinets, I. & Ilina, Y. & Alekseeva, L., 2014. "Ownership structure and dividend policy: A study of Russian public companies with dual class shares," Working Papers 6384, Graduate School of Management, St. Petersburg State University.

    More about this item

    Keywords

    board size; board independence; private benefits of control; dual-class stock companies; Russia;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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