Despite increasing attention toward Russia's economy and capital market,
corporate governance norms of Russian public firms are rarely analyzed.
This project presents and interprets evidence regarding various
governance practices followed by Russian firms covering almost the
entire period of the existence of the Russian stock market. Its findings
run counter to some widely held beliefs according to which Russia is a
country with high resistance to corporate innovations due to socialist
legacies.
Part one of this two-volume study focuses on the role that boards of
directors play in reducing intra-corporate agency conflicts. Russian
companies have adopted progressive governance mechanisms including
director independence, nationality and gender diversity on the board,
dismissal of poorly performing CEOs, and cross-listing of companies on
foreign markets with stringent reporting obligations. Some of these
innovations have had notably positive impact on firms' performances and
market valuation. Others, such as nationality diversity on boards of
directors, enhanced the image of Russian companies but made little
contribution toward improving internal governance. Unresolved issues
impeding further progress include limited liability of directors before
shareholders due to imperfections of the Russian legal system, a taboo
on disclosures of executives' compensations, and generally high risks of
conducting business in Russia. Despite impressive improvements in
internal practices, Russian firms still have a long way to go to achieve
the governance levels of their peers in developed countries.
