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Federal state shareholdings in Russian companies: Origin, forms and consequences for enterprise perfomance

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  • Alexander Muravyev

    (RECEP)

Abstract

This paper studies the impact of federal state shareholdings on the performance of Russian companies. It differs from most similar studies in two respects. Firstly, it focuses on mixed ownership companies rather than conventional state enterprises. Secondly, it distinguishes between several types of federal state shareholdings, namely elected blocks, residual blocks (which may be held by two bodies with different functions – the Ministry for State Property and the Russian Fund for Federal Property) and golden shares. The paper describes the origin of federal state shareholdings and discusses their possible implications for company performance. Econometric analysis shows that companies with state ownership generally perform worse than the average firm in terms of labour productivity and profitability. However, there are remarkable differences in the performance of companies with different types of state shareholdings. Companies with residual blocks held by the Property Fund are the worst performers, followed by companies with residual blocks held by the Ministry for State Property. Companies with elected shareholdings as well as with golden shares do not differ from the average enterprises in the respective industries. These differences in performance are explained by the different degrees of control the federal state has over enterprises with various types of shareholdings – greater control is associated with better performance. The paper concludes that the government should avoid keeping equity stakes in companies unless there is a good reason to retain them. If the state wants to keep an ownership stake in a company, reliable control structures must be created. Finally, the issue of golden shares in strategically important companies seems to be a reasonable alternative to retaining some control over them through equity ownership.

Suggested Citation

  • Alexander Muravyev, 2003. "Federal state shareholdings in Russian companies: Origin, forms and consequences for enterprise perfomance," Macroeconomics 0303007, EconWPA.
  • Handle: RePEc:wpa:wuwpma:0303007
    Note: Type of Document - pdf; prepared on IBM PC ; to print on HP/PostScript/Franciscan monk; pages: 37 ; figures: included
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    File URL: http://econwpa.repec.org/eps/mac/papers/0303/0303007.pdf
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    References listed on IDEAS

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    1. Nellis, J., 1999. "Time to Rethink Privatization in Transition Economies?," Papers 38, World Bank - International Finance Corporation.
    2. 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.
    3. Dobrodey Vladimir & Gimadi Ilya & Perevalov Yuri, 2001. "The Impact of Privatisation on the Performance of Medium and Large Industrial Enterprises," EERC Working Paper Series 2k/01e, EERC Research Network, Russia and CIS.
    4. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-319, March.
    5. J. Stiglitz, 1999. "Whither Reform? Ten Years of the Transition," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.
    6. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, January.
    7. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 995-1025.
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    Cited by:

    1. Sprenger, C., 2010. "State Ownership in the Russian Economy. Part 2. Governance Problems and Performance Effects," Journal of the New Economic Association, New Economic Association, issue 7, pages 90-110.

    More about this item

    Keywords

    Corporate governance; state ownership; firm performance; Russia;

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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