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307
Conclusions
Tatiana G. Dolgopyatova, Ichiro Iwasaki, and Andrei A. Yakovlev
In this book, we reported our main research findings from the Japan–Russia
joint research project entitled “Corporate Governance and Integration
Processes in the Russian Economy” conducted from 2004 to 2008. Using a
unique dataset of Russian joint-stock companies, we investigated the struc-
ture of governance mechanisms and their impacts on corporate governance
and managerial behavior in Part I of this volume. In Part II, we empiri-
cally examined the relationship between Russian business groups and their
affiliate companies. In Part III, we focused on the role of the banking sector,
business associations, and the state in the corporate governance of Russian
nonfinancial corporations. In this sense, this book is an attempt to provide
readers with a comprehensive view of the Russian contemporary business
sector. In this concluding chapter, we evaluate the research achievements in
this book and discuss the further research agenda.
Major findings
First of all, our examination of the results from the enterprise survey gives
firm confirmation to the following two predominant views of the Russian
business sector in transition: (a) the high level of ownership concentration
in business enterprises and (b) the remarkable progress in business integra-
tion among them in the form of holding companies and other types of busi-
ness groups. At the same time, however, we also found three new trends, to
which we should give considerable attention if we want to grasp the reality
of the Russian corporate system.
The first trend is the wider use of corporate governance instruments in strategic
decision-making. It is broadly believed that the attempts made by Russian
companies to disclose company information, to employ outsider and inde-
pendent directors, to pay dividends on a regular basis, and to launch initial
public offerings (IPOs) on international stock markets in the early 2000s
were measures that aimed at improving their image in the world business

but were irrelevant to actual strategic decision-making. Our firm-level
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308 Organization and Development of Russian Business
analyses, however, showed that there are factors other than image factors
or the pressure of minority shareholders influencing the adoption of the
current best practices of corporate governance. Russian companies resort
to the use of corporate governance mechanisms for the solution of agency
problems between shareholders and managers. In many cases, Russian firms
rely on internal instruments, including boards of directors and incentive
provisions to managers according to company performance. The chapters
in Part I of this book support this view.
The second trend is the beginning of the separation of management from
ownership. In the 1990s, top managers, such as CEOs, company presidents,
and general directors, were capable of acting as key proprietors in their
companies; however, as the scale and complexity of the Russian businesses
continued to grow, this traditional corporate model became problem-
atic for many medium and large-scale enterprises. Contrary to the fact
that most of these top managers are no longer able to effectively run and
control their companies under their ownership, the newly emerged hold-
ing companies and other business groups gained ascendancy over these
independent firms, especially in terms of corporate governance and asset
management. Three chapters in Part II empirically verify this point. Now,
Russian business groups actively hire professional managers to run their
affiliate companies, and this movement makes exciting progress in the
separation between management and ownership in the Russian corporate
sector.
The third trend, which is logically related to the other two, is that there
is substantial renewal of management and establishment of the linkage between
managerial turnover and firm performance. This fact is applicable not only for
top managers but also for board directors and senior ranking managers, such

as heads of economic departments. There is a firm belief that Russian man-
agers are relatively more insensitive to poor performance than managers in
developed countries due to their greater ownership and stronger entrench-
ment. Some argue that this is the reason for the difficulty in detecting a
statistically significant relationship between managerial turnover and firm
performance in Russian firms. Nevertheless, the empirical analyses based
on our dataset show that, distinctly from the majority of earlier studies, a
company’s bad performance is becoming more and more often the reason
for the replacement of company executives in that company (see Chapters 5
and 8 for more details). Our analysis of personnel changes in the surveyed
firms is clear evidence in favor of a team-type management in Russian joint-
stock companies (see Chapter 6).
These trends cited above are especially typical for group member firms.
Therefore, we report that business groups, the business model of which is
designed for the protection of rights and interests of company owners in
imperfect institutional environments, can be regarded as better corporate
governance actors in the current Russian business sector.
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Conclusions 309
Future research
Overall, our firm-level study strongly suggests that the Russian corporate
model is gradually but surely evolving against the background of remarkable
changes in business circumstances inside Russia and within the world market.
As we report in Chapter 1, very typical of the Russian economy in the 1990s
was the phenomenon of a firm in transition run by managers who were vir-
tually independent of shareholders. This type of firm is characterized as one
(a) having an extremely opaque ownership structure, (b) grossly violating
shareholder rights, (c) being hostile to outside investors, and (d) rejecting or
neglecting the formal rules and tools of corporate governance. Our empirical
evidence indicates that this corporate model has now become a thing of the

past. Namely, the recent development of Russian joint-stock companies is
moving toward the classical pathways that are typical of market economies.
In our opinion, two company models may be feasible and coexist in Russia:
many medium-sized companies have a propensity to have a concentration of
ownership. They will have a limited presence in securities markets and, gen-
erally, will maintain some distance from the Russian state. On the contrary,
we expect that the largest businesses will rely more on informal relationships
with their investors and the governmental authorities and establish very spe-
cific management and governance systems inside.
In order to verify our predictions concerning the future of the Russian
corporate model, we should examine the possible impacts of the follow-
ing three factors on corporate governance and management behavior:
(a) external competitive pressure, (b) access to available market resources,
and (c) potential of capital investment.
It is very likely that external competitive pressure will become stronger in
the Russian economy. Russia is now a part of the global market, and, hence,
many argue that competition with foreign firms and imported goods will
greatly affect the behavior of domestic firms. Several questions need to be
asked, such as: how much will toughening of the competition be countered
with mergers and acquisitions, further expansion of company scales, and
the extension of business groups? Will Russian firms incorporate themselves
into worldwide value-creation chains in such a manner that present propri-
etors will be able to retain their ownership rights, while business activities
in the chains will be coordinated by the means of contracts? How much will
the stronger competitive pressure encourage Russian firms to expand their
overseas investments? Will competition give the present Russian company
owners sufficient incentives for internal reorganization and streamlining
their businesses, which will lead to better management, or will these chal-
lenges be met by new, so far unknown owners of these companies? These
questions will need to be answered in future research.

It is also probable that competition for access to available market resources
will become more intense. Shortage of skilled labor is already one of the
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310 Organization and Development of Russian Business
most acute problems for Russian firms. What changes will occur, in this
context, in internal policies of the firms in such matters as wage adminis-
tration, rendering of social packages to employees, and raising the level of
their skills? How will the companies cooperate with federal and regional
authorities in coping with labor shortage? What will be the impact of an
aggravating labor shortage on the development of mechanisms and prac-
tices of collective actions in the Russian corporate sector? An examination
of these questions will be important for a thorough understanding of the
major constraints for the future development of Russian business.
Capital investment is another problem area in the sphere of resources. In
recent years, economic growth was based on the utilization of idle old facili-
ties inherited by enterprises from the Soviet planned economy. At present,
use of these facilities has reached its limit, and the facilities themselves are
deteriorated beyond repair. The industrial sector is facing a need to renew
its fixed assets on a large scale, which will call for the massive expansion of
external financing contrary to the reliance on internal financial resources,
which was predominant throughout the entire postreform era. We will
need to consider ways to build relationships between enterprises and finan-
cial institutions in this situation. Furthermore, whether the role of banks
as stakeholders and shareholders will grow stronger will need to be deter-
mined, as will the need for external financing and whether it will make
Russian joint-stock companies more open and transparent.
In addition to the research subjects outlined above, we should add the
following three unanswered issues:
First, demographics present an important crossroad in evolution of the
organizational pattern of Russian firms. In 15 to 20 years, age limitations

will force the present generation of Russian company owners and manag-
ers to retire. It will be interesting to see what they or their heirs will do
with their equity stakes. Will they sell their shares to strategic investors,
including multinational corporations, will they launch them on secu-
rities market in order to divide these large stakes between many small
shareholders, or will they remain in their family businesses? The former
and latter variants mean that the present concentrated ownership will
remain unchanged. The second variant will mean a move to a more dif-
fuse ownership, which will imply different ways of interaction between
owners and managers and will call for reliance on the principles of cor-
porate governance.
Second, the choice of a variant will depend on preferences of present-day
owners, but the condition of the external environment and its institu-
tions will be the decisive factor. Our study was based on data of financial
statements and on opinions and assessments of top managers. The survey
gave no access to enterprise owners. However, the interests of other agents
may not coincide with the interests of top management, while the former
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Conclusions 311
may have much stronger potential for influence on corporate governance.
For this reason, the interests and behavior of strategic and portfolio inves-
tors, minority shareholders, banks and pension funds, and participants of
securities markets, including auditors, stock exchanges, and brokerages,
could become important aspects of research.
Finally, the relationships of large- and medium-scale Russian enterprises
with the state will remain one of the key issues in the years to come.
The quality of public institutions lags far behind the improved quality of
management in the private sector, but interference of state administration
in the economy is expanding. Will state-owned corporations enjoying
preferential access to resources become efficient, or will they become an

impediment to competition and an obstacle to evolution of the private
sector? How capable will the state be of dividing the functions of a propri-
etor from the functions of a regulator and arbitrator, including a provision
of guarantee for real independence of the court system? These questions
are also of great importance to predict the possible development in the
management system and governance mechanism in Russian companies.
The issues listed above warrant new research. We are optimistic that our
research and other international collaborations will solve the problems dis-
cussed here and lead to a better understanding of the Russian economy and
its corporations.
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312
Appendix
Outline of the Japan–Russia
Joint Enterprise Survey
Tatiana G. Dolgopyatova, and Ichiro Iwasaki
Underlying this volume is a Japan–Russia joint research project launched
by the Institute of Economic Research, Hitotsubashi University, and the
Institute for Industrial and Market Studies, State University – Higher School
of Economics (SU–HSE). The core of this research was a large-scale enterprise
questionnaire survey conducted all over the Russian Federation in 2005, the
results of which were used as the common basis for the empirical analyses
performed in this book. The survey was designed to gain an understanding
of the evolutionary process of firms’ organization and the business environ-
ment in transforming Russia and to shed light on corporate governance in
the former socialist enterprises. In this appendix, we first briefly describe
how the survey was designed and implemented, and then explain the basic
characteristics of the surveyed firms.
1
Organization of the survey

To assess the realities of company management and corporate governance
in Russia, we planned to interview the executives of more than 800 corpo-
rations, or about 0.5% of all working joint-stock companies (JSCs), at the
beginning of 2005.
2
The focus of our enterprise survey was on the industrial
and communications (except for postal services) sectors. This is because,
in these two sectors, joint-stock companies account for the largest share of
sales and because most of the corporations that have issued stocks or bonds
in the capital market belong to these sectors. Among industrial sectors, we
chose the eight most important branches of the Russian industry: (a) fuel
and energy, (b) metallurgy, (c) machinery and metal working, (d) chemicals
and petrochemicals, (e) wood, paper, and wood products, (f) light industry,
(g) food industry including flour-grinding and the mixed fodder industry,
and (h) construction materials.
The interview survey targeted Russian JSCs with more than 100 employ-
ees. This criterion was set to exclude small businesses, for which the issue
of corporate governance is largely a secondary matter. Random stratified
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Appendix 313
samples of large and medium JSCs in the industrial and communications
sectors were constructed by taking into account three attributes: the branch
to which they belonged (for the industrial sector); their company size (i.e.,
total number of employees); and their legal form (open versus closed joint
stock company).
3
In addition, as there were only about 160 Russian compa-
nies in the surveyed sectors that had issued stocks or bonds in domestic or
foreign securities markets, we asked the executives of all of these companies
to answer our questionnaire and interviewed all who agreed to our request.

The share of communications enterprises in the total surveyed firms was
set at 10%. The share of open JSCs was expected to be more then 60% of
the sample. This limit was defined based on official statistics, according to
which open joint-stock companies made up nearly 61% of all JSCs in 2005
(Rosstat 2007).
The survey was carried out by the Levada Center, one of the best-known
social research institutions in Russia. Its forerunner is the USSR Public
Opinion Poll Center, established in 1988 as an affiliate of the Ministry of
Labor. The Levada Center stratified and sampled the firms to be surveyed
in reference to the official data on Russian enterprises and commercial
organizations in accordance with our survey design reported above. Lists of
enterprises to be surveyed were created on the basis of the SKRIN EMITENT
(issuers) and “Biznes-Karta” (Business Map) databases and website informa-
tion about Russian firms that issue their stocks and/or bonds in exchange
markets in Russia, New York, London, or Frankfurt.
The fieldwork was carried out by professional interviewers of local divi-
sions of the Levada Center from February through June, 2005, in 64 federal
constituent entities (autonomous republics, regions, and autonomous areas)
throughout Russia. The number of surveyed companies in these federal enti-
ties fluctuates between 1 and 47.
The survey posed great difficulties. One of the most difficult problems
was that the executives of Russian companies were reluctant to spend their
valuable working time talking with the interviewers for such surveys;
another was that they were hesitant to provide information concerning
ownership relations and business activities due to the risk of disclosure.
One in three companies that we initially made contact with refused to
participate in the research. The other impediment to the survey of cer-
tain businesses was their remote locations. One in ten companies that we
selected for the survey was in a remote location, making the transportation
costs prohibitive within our budget. In addition, about 9% of the candidate

firms had been excluded from the research, since they were under reor-
ganization (bankruptcy proceedings or being reorganized into a limited
liability company).
We completed the survey questionnaires through interviews with 859 com-
pany executives. The questionnaires were carefully checked before the data
was entered. As a result, replies from 822 companies were considered to be
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314 Appendix
valid and finally adopted. According to Iwasaki (2007b), between 1992 and
2003, at least 50 interview surveys on companies were carried out in Russia,
and the average number of companies (mostly joint-stock companies) sur-
veyed was 184 (median: 107). This suggests that our survey is the largest
interview survey of joint-stock companies that has ever been conducted in
Russia by 2005 and that it is comparable to those that have been carried
out by international financial institutions, such as the World Bank and the
European Bank for Reconstruction and Development (EBRD).
The surveyed firms
As Table A.1 shows, one-third of the total 822 surveyed firms were repre-
sented by their CEOs (i.e., company presidents or general directors), and
more than 60% of the JSCs, by the first deputy of the CEO or deputies in
charge of economy, finance, sales, or corporate governance matters. A small
number of JSCs were represented by their board chairmen and heads of
corporate governance departments.
4
The average length of service of the
respondents was 13.5 years (median: 9), and that of service in their current
position was 6.2 years (median: 4).
The rate of response reached 97–100% for the majority of the questions.
One optional answer, “difficult to answer,” was provided for a number
of questions, and it may have had a negative effect on the share of well-

defined answers. As a rule, respondents selected this option in 1–2% of
cases, but sometimes “difficult to answer” was used for 8–10% of the
answers. It was typical for a number of questions concerning ownership
composition.
The sample distribution by federal district is shown in Table A.2. This
indicates that the regional proportion of the samples of this survey was
very close to that of the actual proportional distribution of Russian com-
panies, except for the fact that the number of surveyed firms based in the
Privolzhsky (Volga) Federal District was relatively higher.
Figure A.1 shows the composition of the surveyed firms according to
the sectors and branches of industry. The largest share belongs to the
Table A.1 Composition of respondents by their position in a company
Number Share (%)
Total respondents 822 100.0
CEO (company president or general director) 277 33.7
First deputy of director (first vice-president) 85 10.3
Deputy director (vice-president) 417 50.7
Head of department on corporate governance 30 3.6
Chairman of a board of directors 13 1.6
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Appendix 315
Table A.2 Geographical composition of the surveyed firms: Comparison with offi-
cal statistics

The joint survey Official data on
January 1, 2005
(Rosstat 2005)
Number of
surveyed
firms

Share
(%)
Number of
registered
enterprises,
thousands
Share
(%)
Russian Federation, total 822 100.0 509.5 100.0
Central Federal District 265 32.2 181.8 35.7
Northwest Federal District 97 11.8 72.1 14.1
South Federal District 71 8.6 55.0 10.8
Privolzhskii Federal District 197 24.0 76.2 15.0
Ural Federal District 83 10.1 40.1 7.9
Siberian Federal District 85 10.3 58.4 11.5
Far East Federal District 24 2.9 25.9 5.1
Fuel and energy
8%
Metallurgy
4%
Chemical and
petrochemical
4%
Machinery and
metal working
31%
Wood, paper, and
wood products
8%
Construction

materials
9%
Light industry
6%
Food industry
21%
Communications
9%
Figure A.1 Composition of the surveyed firms by sector and industry
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316 Appendix
machinery and metal working businesses. The food industry follows,
and other industries range from 4 up to 10% of our sample. The share
of the communications sector was equal to 8.6%. We can compare the
composition of companies by branches of industry with official data, i.e.,
the number of industrial enterprises (all legal forms) reported in 2004
to Rosstat (Table A.3). Fuel and energy companies were presented more
often, which is clearly justified because the sample included many compa-
nies with securities traded on stock markets. The wood, paper, and wood
products industries were represented less than in the population. This can
be easily explained by the remote location and the large share of small
and medium enterprises and limited liability companies in this industry,
which could not be included in the sample. The same could be said for
light industry.
As is reported in Table A.4, 52% of the surveyed firms are medium-sized,
with fewer than 500 workers. About 8% of the companies had 5,000 or more
Table A.3 Sectoral composition of industrial firms surveyed: Comparison with offi-
cal statistics (% of total)

Industrial firms

surveyed
Offical data
(Rosstat 2006)
Industry, total 100.0 100.0
Fuel and energy 8.8 3.3
Metallurgy 4.8 2.3
Chemical and petrochemical 4.4 5.7
Machinery and metal-working 33.9 35.7
Wood, paper, and wood products 8.4 17.2
Construction materials 10.4 6.8
Light industry 6.8 10.3
Food industry 22.5 18.7
Note: Official data contains more than 138,000 enterprises of eight industrial sectors in 2004.
Table A.4 Composition of the surveyed firms by total number of employees (% of
total)
Surveyed
firms
Industrial
firms
Communications
enterprises
Surveyed firms, total 100.0 100.0 100.0
100–299 employees 30.2 29.4 38.0
300–499 employees 21.9 23.0 9.9
500–999 employees 19.0 19.6 12.7
1,000–4,999 employees 20.9 21.4 15.5
5,000–9,999 employees 4.0 3.5 9.9
more than 10,000 employees 4.0 3.1 14.1
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Appendix 317

employees. The average number of workers of the surveyed firms was 1,884
(median: 465). This is much larger than that of most Russian companies
in the two sectors, according to the official statistics. This fact reflects our
sampling strategy to focus only on joint-stock companies with more than
100 employees. The bias toward larger enterprises is natural when study-
ing corporate governance and business integration. The 822 surveyed firms
employed a total of 1.5 million people. This represents 10.2% of a total of
15.2 million people employed in the year 2004 by the industrial and com-
munications sectors (Rosstat 2005, p. 149).
The composition of surveyed firms in the sample by legal form of incor-
poration is as follows: 553 firms or 67% were open JSCs, and 269 or 33%
were closed JSCs. The latter includes four workers’ JSCs (people’s enterprises),
which are a special form of closed company.
5
Open JSCs were more often
presented in the industrial sector: 68% versus 56% in the communications
sector. In examining when they were established, it was evident that the
majority of them, 570 companies (69.3%), were founded through a privati-
zation process that started after the collapse of the Soviet Union, 124 firms
(15.1%) were newly formed in and after 1992, 79 businesses (9.6%) were
newly established by a division divested from another privatized or state-
owned firm, and 24 enterprises (2.9%) were established by firms that had
merged.
The survey included many companies with securities traded on capital
markets: nearly 13% of the JSCs in the sample placed shares or bonds on
Russian exchanges, and more than 4%, on foreign exchanges. United group
with 107 objects with traded securities joined one of ten industrial compa-
nies and one of two communication firms.
One of the aims of our joint research project was to clarify the business
behavior that is now rapidly developing among Russian business communi-

ties or the processes of business integration through the formation of busi-
ness groups, including holding companies. With regard to this aspect, the
respondents to the questionnaire were asked about the interrelationship
between the surveyed firm and its business group through ownership. It
was found that, among the 822 companies, 499 corporations (60.7%) were
“independent firms” that had no ownership relationship with any business
group, and the remainder, 323 enterprises (39.3%), were “member firms of
business groups.” Among the latter, 278 companies (33.8%) were so-called
“affiliated enterprises,” and 44 (5.4%) were “core enterprises of their busi-
ness groups.” The share of member firms of holdings was 2.5 times higher
in communications than in industry.
6
Lastly, Table A.5 presents a more detailed breakdown of the surveyed firms
by location, sector and industry, form of incorporation, and total number
of employees.
To sum up, our sample is representative of large- and medium-scale JSCs
in Russia and fits the research objectives of this volume.
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318 Appendix
Table A.5 Breakdown of the surveyed firms by location, sector and industry, form of incorporation, and total number of employees
Location
Sector and industry Legal form of
incorporation
Total number of employees
Industry
Fuel and energy
Metallurgy
Machinery and metal working
Chemical and petrochemical
Wood, paper, and wood products

Construction materials
Light industry
Food industry
Communications
Open JSC
Closed JSC
Workers’ JSC (People’s enterprise)
100–299
300–499
500–999
1,000–4,999
5,000–9,999
over 10,000
Russian Federation, total 751 66 36 255 33 63 78 51 169 71 553 265 4 248 180 156 172 33 33
Central Federal District 250 14 10 81 9 21 33 18 64 15 182 82 1 81 54 56 56 10 8
Northwest Federal District 87 5 3 33 2 18 6 4 16 10 62 35 0 30 21 21 22 1 2
South Federal District 66 7 2 18 3 4 5 1 26 5 51 20 0 21 18 11 14 5 2
Privolzhsky (Volga) Federal
District
178 14 9 71 13 8 17 18 28 19 118 78 1 58 48 31 40 10 10
Ural Federal District 77 9 9 28 1 6 6 3 15 6 64 19 0 16 16 18 24 3 6
Siberian Federal District 76 14 3 19 5 5 9 6 15 9 59 24 2 34 16 15 13 4 3
Far East Federal District 17 3 0 5 0 1 2 1 5 7 17 7 0 8 7 4 2 0 3
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Appendix 319
Notes
1. A more detailed explanation of our sampling method, main results of the survey,
and questionnaire is provided in Dolgopyatova and Iwasaki (2006).
2. According to official data released by the Federal Tax Service of the Russian
Federation, 168,600 JSCs were listed in the Unified Register of Legal Entities on

January, 1, 2005, including 5,500 companies in the process of the liquidation.
3. With regard to the legal form of incorporation of Russian JSCs, see Chapter 3 in
this book.
4. Respondents were selected under strict constraints. The list of questions for this
survey could be answered only by a president (CEO or general director) of a
surveyed firm, its first vice president (first vice general director), vice president
(deputy of general director) in charge of economics, finance, sales, or corporate
governance, or the Chair of the board of directors. The heads of corporate govern-
ance departments, including those for securities markets and investor relations,
were allowed to answer only if their companies had more than 500 employees.
However, none of the heads of departments of accounting (chief accountants),
engineering (chief engineers), personnel, public relations, or manufacturing was
allowed to reply.
5. For more details of workers’ JSCs, see Iwasaki (2007a: 240–243).
6. See Chapters 7, 8, and 9 in this book for more details of the Russian business
groups, including holding companies.
Bibliography
Dolgopyatova, T. & Iwasaki, I. (2006) Exploring Russian corporations: Interim report
on the Japan–Russia joint research project on corporate governance and integra-
tion processes in the Russian economy. Discussion paper No. B35. Tokyo: Institute
of Economic Research, Hitotsubashi University (available at: -u.
ac.jp/English/publication/ier.html).
Federal State Statistical Service (Rosstat) (2005) Rossiiskii Statisticheskii Ezhegodnik
2005 (Moscow: Rosstat).
Federal State Statistical Service (Rosstat) (2006) Promyshlennost’ Rossii 2005 (Moscow:
Rosstat).
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Deyatel’nosti Predpriyatii (
Bez Sub’ektov Malogo Predprinimatel’stva) za 2005 God (Po
Dannym Strukturnogo Obsledovaniya) (Moscow: Rosstat).

Iwasaki, I. (2007a) Corporate law and governance system in Russia. In: Dallago, B. &
Iwasaki, I. (eds), Corporate Restructuring and Governance in Transition Economies
(Basingstoke: Palgrave Macmillan).
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321
Index
2SLS, see two-stage least squares
estimation/regression
3SLS, see three-stage least squares
estimation/regression
affiliated company, 43–4, 77, 93, 116,
175–6, 198, 202–3, 205, 207, 210,
216, 317
agency conflict, 122
agency problem, 8, 39, 64, 82, 105, 177,
191, 196, 202, 205, 208–10, 308
agency theory, 64, 90, 101–2, 107, 115
Agroprombank, 243
analysis of variance, 126
ANOVA, see analysis of variance
antimonopoly legislation, 20
audit committee, 93, 290
BA, see business association
Bank for Foreign Trade, 237, 239, 242,
255, 285
banking sector, 8–9, 46, 235–6, 239,
243, 247, 254–5, 285, 307

bankruptcy, 17–19, 28–9, 68, 73, 84,
106, 200, 285, 313
bargaining hypothesis, 6, 91, 101–2,
107, 115–16
bargaining variable, 90, 101–2, 107–8,
110, 115
barter, 15, 26
BEEPS, see Business Environment and
Enterprise Performance Survey
bell-shaped distribution, 99
binary logistic estimation/regression, see
logit/logistic estimation/regression
block share, 28, 160, 162, 204, 269,
270–1
block shareholder, 6, 40–2, 50
board chairman, 91–3, 99–100, 103–4,
106, 114, 116, 122, 155, 163, 179,
270, 274
board composition, 91, 94, 102, 129,
145, 206 –8
board independence, 100, 103
board leadership, 91, 102
board of directors, 5–6, 53–6, 89–90,
92–4, 98–100, 115, 117, 122, 130, 168,
177–8, 191, 199, 204–6, 208, 210–11,
269, 273, 290, 292, 302, 314, 319
board size, 6, 91, 94–6, 98, 101–10, 115
business association, 4, 8–9, 258–61,
263–6, 270, 276, 292, 307
business diversification, 104, 107–8

business environment, 5, 62, 72, 149,
158, 260, 287, 312
Business Environment and Enterprise
Performance Survey, 260–2, 268, 281
business group, 4, 7–8, 74–8, 82–3, 91,
100, 102–3, 107–10, 114, 116, 131,
140, 161, 174–5, 180, 188, 195–207,
209–11, 213–30, 263, 269, 271, 273,
275, 279, 294–6, 302, 307–9, 317, 319
business integration, 4–10, 12, 41, 43, 46,
99, 173, 177, 179, 181, 183, 185, 188–9,
191, 213, 218, 225, 279, 307, 317
business internationalization, 104,
106–7, 109
business-activity variable, 91, 101–2,
104, 106–8, 110, 114–15
capital investment, 2, 10, 13, 21, 48, 51,
218–19, 264, 269–71, 273–4, 309–10
capital market, 89, 94, 105, 107–9, 111,
312, 317
capital outflow, 28
capitalization, 31, 41–2, 65–7, 71, 151,
155, 168, 284–6, 303
cash flow, 168, 182, 222–3, 229, 295
Central Bank, 237, 239, 244
CEO, see chief executive officer
CEO tenure, 102–3, 115, 125
CEO turnover, 123–38, 141–5
CG Code, see Corporate Governance
Code

CG quality, see quality of corporate
governance
chief executive officer, 6, 52–3, 79,
89–90, 102–4, 111, 122–38, 140–4,
148, 150–1, 155–6, 159, 167–8, 175–9,
193, 204, 259, 275–6, 292, 314, 319
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322 Index
Civil Code, 18, 84, 92, 116, 211, 258
civil society, 259, 264, 268, 270, 278, 281
closed joint-stock company, 6, 42, 59,
62–79, 81–2, 84, 145, 161, 200, 273,
313, 317–18
closely held firm, 32
collective executive organ, 93, 117, 290
command economy, 235
commercial bank, 8–9, 22, 24, 75, 77,
79, 82, 85, 96, 103, 255
company group, 7–8, 43, 48, 50, 57–9,
69, 99, 134, 149, 173–6, 180, 185, 188,
191, 193, 195, 199, 211, 228, 294–5
continental law, 63
controlling shareholder, 22, 40, 43, 47,
52–4, 185, 205, 295
cooperative enterprise, 16
corporate control, 5–7, 24, 39–44, 52,
54, 57, 59, 61, 89, 102, 155, 173–5,
177–8, 181, 192, 196, 199, 209
corporate finance, 6, 9, 19, 65, 83, 114,
235–6, 244, 247, 250, 252, 254

corporate form, see legal form of
incorporation
corporate governance, 4–10, 19, 28, 30,
39, 47, 52, 55, 57, 64, 68, 70, 73, 91–3,
103, 109, 115–16, 122, 124, 129, 132,
136, 138, 141, 143, 173, 175, 177, 180,
188, 191–2, 195–9, 201–6, 208–11,
219, 223, 225, 258, 262, 284–6,
288–9, 291, 295–7, 299–300, 302–3,
307–12, 314, 317, 319
Corporate Governance Code, 19, 68,
92–4, 105, 116–17
corporate model, 91, 308–9
corporatization, 62, 285
corruption, 260, 264, 268, 271,
281, 286
countervailing power, 74
creditor protection, 235
cumulative voting, 92, 99, 116
denationalization, 17
disorganization, 16, 213, 302
dominant shareholder, 5–6, 30, 41, 57,
123, 126, 131–5, 137, 140, 143, 174,
204, 295
dual leadership system, 122
Duke–Berkeley occasional papers on the
second economy in the USSR, 14
endogeneity, 79, 83, 91, 101, 109,
114, 145
endogenous board formation, 91, 112

EU, see European Union
European Union, 27, 31
FCSM, see Federal Commission for
Securities Market
FDI, see foreign investment
Federal Commission for Securities
Market, 93–4, 99, 116
Federal Financial Markets Service, 66, 68
Federal State Statistical Service,
150, 316
FFMS, see Federal Financial Markets
Service
FIG, see financial-industrial group
financial crisis, 1, 9, 12–13, 18, 31, 124,
236, 243, 245, 252
financial sector, 24, 27, 41, 62, 235–7,
239, 247–8, 255, 259
financial support, 6, 83, 265–6, 274,
292, 295
financial-industrial group, 18, 30, 74,
85, 103, 214, 229, 243
five year plan, 14
foreign investment, 1, 4, 10, 17–18, 29,
32, 131, 284
foreign investor, 1, 7, 27, 32, 45–8, 75,
77, 108, 123, 127–8, 131, 133–5, 137,
140, 143, 180, 184–5, 188, 193, 266,
284, 295
foreign ownership, 82, 85, 135, 275
foreign shareholder, 32, 44, 85, 131–2,

135, 140, 294–6, 302
F-test, 78, 207
FTSE/ISS scorecard, 289
GAAP, see Generally Accepted
Accounting Principles
Gazprom, 243
general director, 7, 9, 111, 144, 148–52,
154–66, 168, 173, 183, 200–1, 205,
263, 266–7, 269–70, 273–4, 308,
314, 319
general shareholder meeting, 63, 89,
92–3, 117, 122, 205, 208
Generally Accepted Accounting
Principles, 84
Gosbank, 235
9780230_217287_17_ d. dd 322 5/12/2009 5:41:33 PM
Index 323
governance variable, 90, 101–3, 107–8,
110, 114–15
Guta Bank, 239
Hausman specification test, 113–14
Heckman two-step estimation, 252–3
Hitotsubashi University, 4, 132, 286, 312
holding company, 4, 43, 50, 58, 74, 76,
140, 149, 175–6, 185, 188, 191, 193,
195, 199, 201, 211, 228–9, 294–5
hostile takeover, 69, 73, 105, 131
IAS, see International Accounting
Standards
IIA assumption, 145

in-depth interview, 39, 41, 52, 173, 182,
193, 259, 261, 280
industrial association, 258, 268, 272,
277–80
industrial policy, 15, 22
information asymmetry, 9, 73, 105, 132
initial public offering, 18, 94, 96–7, 168,
284–5, 307
insider chairman, 100–1, 108
insider control, 125
insider director, 93, 95, 98–9, 103,
105–6
insider ownership, 65, 85, 122–3, 125
institutional environment, 6, 9, 29, 44,
58, 154, 156, 158–9, 165, 196, 210–11,
213–14, 236, 259–60, 262, 264–5, 269,
271, 273, 284, 308
institutional investor, 85, 287
interbank market, 237, 243
internal conflict, 27, 29–30, 140–1, 143,
145, 276
internal control system, 89, 106, 122, 132
Internal Revenue Service, 84
International Accounting Standards, 84
intra-corporate dispute, 43–4, 57, 177–8
investment fund, 18, 45, 75, 77, 85,
235, 246
IPO, see initial public offering
IRS, see Internal Revenue Service
Japan–Russia joint enterprise survey, 4–5,

65, 68, 74, 83, 91, 114, 123, 132, 236
large shareholder, 32, 40–1, 44, 46,
52–3, 74, 102, 108, 131, 150–1, 154,
159, 163, 174–6, 191, 204, 220, 227,
267, 269–70, 276, 295
large-scale institutional change, 5
Law on Bankruptcy, 17, 68
Law on Joint-Stock Companies, 18–19,
63, 66–7, 72, 84, 92–3, 116–17, 290
Law on Minimum Wages, 84
legal form of incorporation, 5–6, 59, 62,
65, 72, 75, 83, 132, 193, 317–19
Levada Center, 5, 85, 313
level-shift dummy, 124
loan-for-share privatization, 18, 23, 25
lobbying, 260–1, 279
logistic cumulative distribution
function, 145
logistic estimation/regression, see logit/
logistic estimation/regression
logit/logistic estimation/regression,
50–1, 86, 126, 132, 135–7, 143, 160,
162, 174, 183, 185–6, 189, 221, 224,
230, 268, 270, 273–5
majority shareholder, 31, 39–40
managerial entrenchment, 73, 82, 123
managerial turnover, 6–7, 89, 123–33,
135, 137–8, 141, 143–5, 150–1, 154–6,
158, 161, 166–7, 179, 193, 308
marginal effects, 79, 136, 139–40,

142, 145
market failure, 9
mass privatization, 6, 8, 17, 21, 24, 62,
64, 67, 69, 71–2, 76, 83, 123, 125, 144
measurement error, 85, 133
ministry of cash, 243
minority shareholder, 20, 22, 30, 42,
44, 53, 55, 92, 99, 116, 143, 159, 177,
288–9, 295, 308, 311
mixed enterprise, 10, 285, 288
MNL, see multinomial logit estimation/
regression
MNP, see multinomial probit
estimation/regression
modernization, 48, 50, 149, 158–61,
165–6, 182
monetary privatization, 18, 21, 62
monetization, 242, 255
multinational corporation/enterprise, 1,
10, 295–6, 310
multinomial logit estimation/
regression, 145
9780230_217287_17_ d. dd 323 5/12/2009 5:41:33 PM
324 Index
multinomial probit estimation/
regression, 132, 135, 137–8, 140–1,
143, 145
national association, 268, 272, 277
nationalization, 41, 158, 285
nomenklatura privatization, 16

null hypothesis, 78, 137, 143, 220
off-budgetary fund, 237
OKONKh, see Russian All-Union
Classifier of the National Economy
Blanches
oligarch, 22, 85, 103, 131, 196, 214
OLS, see ordinary least squares
estimation/regression
one-factory town, 22
open joint-stock company, 40, 62–3,
65–74, 76–8, 82, 133–5, 145, 162, 180,
184–5, 188, 191, 193, 200, 259, 273–6,
313, 317–18
ordered/ordinary logit estimation/
regression, 221, 224
ordered/ordinary probit estimation/
regression, 50, 85, 288, 297, 300
ordinary least squares estimation/
regression, 126, 144, 224, 226
organizational architecture, 5, 64
organizational choice, 64, 68–9, 72,
75, 83
outsider chairman, 100, 106, 108
outsider director, 6, 90–1, 95–6, 98–102,
104–10, 114–15, 117
ownership concentration, 4, 6, 22,
29–30, 39, 40–55, 57–8, 117, 126, 183,
185, 204–9, 288, 295, 307, 309
ownership redistribution, 29, 40, 58,
180–1

ownership structure, 4–6, 9, 22, 40–1,
44, 46–7, 59, 65, 77, 79, 82–3, 90,
101, 122–3, 125–9, 131–2, 137, 140,
143, 148, 159, 199–200, 239, 267,
291, 309
parameter, 145, 296–8, 300
parent company, 8, 43, 117, 152, 155,
174–5, 180, 184, 188, 191, 195, 197,
200–2, 204, 206, 210, 216, 227, 295
people’s enterprise, see workers’
joint-stock company
planned economy, 1, 13–14, 16, 20, 22,
24–6, 193, 310
planning horizon, 14, 156, 160, 162,
165–6, 258, 262, 269, 270–1,
273–5, 290
Poisson estimation/regression, 50–1,
59, 221
politically connected CEO, 149, 159, 168
politically connected firm, 10, 287,
291, 299
price control, 15
price liberalization, 12, 20, 24
privatization, 1, 6, 8, 17–24, 27, 32, 39,
41–2, 52, 59, 62, 64, 67, 69, 71–2, 74,
76, 83, 116, 123, 125, 144, 148, 150–1,
156, 180
probit estimation/regression, 50–1,
75, 79, 83, 85, 129, 132, 135, 137–8,
140 –1, 143, 145, 248, 252, 288,

297, 300
Promstroibank, 243, 255
property rights, 7–8, 10, 27, 32, 39, 57,
90, 115, 148, 158, 167, 174, 180, 188,
191–2, 208, 210, 214, 264, 266–7, 282
proxy fight, 73
public company/enterprise, 21, 23, 42,
44, 63–4, 122, 148, 151, 168, 287–9
quality of corporate governance, 47,
286–9, 291, 295–300, 302–3
quasi-outsider chairman, 100–1, 108
red director/executive, 28–30, 39, 52,
125, 149–50, 167, 192
regional association, 261, 268, 272,
277–8, 280
regression analysis, 50–1, 59, 79–80,
108, 111, 114, 124, 126–7, 129, 132,
135–8, 140–1, 160, 162, 174, 183,
185–7, 189–90, 220, 223, 225–6,
248–50, 253, 268, 270, 273–4, 288,
291, 293, 296–7, 300, 302
relational contract, 197, 199, 202, 206, 228
rent seeking, 9, 20, 30, 261, 280
resource-dependent theory, 90
restructuring, 1, 6–8, 18, 20, 24, 26–7,
29, 31, 47–8, 50–1, 58–9, 103, 125–7,
148–9, 158–62, 165–7, 181–2, 185,
188, 191–3, 203, 209, 213–23, 225,
227–30, 261, 278, 280
9780230_217287_17_ d. dd 324 5/12/2009 5:41:33 PM

Index 325
Rosneft, 241, 285
Rosstat, see Federal State Statistical
Service
RSFSR, see Russian Soviet Federative
Socialist Republic
RTS, see Russian Trading System Stock
Exchange
Russian All-Union Classifier of the
National Economy Blanches, 108, 111
Russian Saving Bank, 9, 236–7,
239–55, 285
Russian Soviet Federative Socialist
Republic, 17, 19, 84
Russian Trading System Stock Exchange,
3, 23, 149
S corporation, 68, 84
sampling, 5, 149, 168, 214, 230, 317, 319
Sberbank, see Russian Saving Bank
second-best institution, 22, 288
securities market, 67, 236, 309–11,
313, 319
separation of ownership and
management, 52, 64, 148, 162, 165,
167, 174–5, 177, 180, 183, 191, 196,
209, 263, 270, 276, 279, 318
share capital, 67, 71
share transferability, 63–6, 72–3, 82
simultaneous equations bias, 127
simultaneous-equations model, 109, 114

single executive organ, 93, 117
single factory model, 13
single-equation model, 109, 114, 118
SKRIN, 5, 92, 108, 111, 117, 222, 313
social asset, 22
social distrust, 102
socialist enterprise, 12–14, 20, 62, 130,
143, 193, 214, 312
SOE, see state-owned enterprise/
company
soft budget constraint, 20, 26, 286
SPARK, 5, 92, 108, 111, 222, 225
staggered board, 92
stakeholder, 40, 55, 84, 199, 202–3,
280, 310
Standard & Poor’s, 42, 44, 289
standard normal distribution
function, 145
state capture, 20, 27–8, 287
state corporation, 285, 303
State University – Higher School of
Economics, 4, 40, 58, 132, 150, 211,
229, 259, 280–1, 286, 312
state-owned enterprise/company, 16,
20–3, 25, 27, 62, 66–7, 71, 76, 91, 99,
104, 125, 144, 148, 214, 285–7, 302–3
stewardship theory, 90
stock market, 1, 33, 41–2, 180, 184, 191,
284, 289, 307, 316
stock ownership, 39–41, 43–4, 47, 51,

53, 55, 57, 59, 60–1, 85, 99, 150, 160,
262–3, 267, 269, 273
strategic industry, 62
SU-HSE, see State University – Higher
School of Economics
supermajority resolution, 93
takeover, 29, 69–70, 73, 102, 105, 129,
131, 196, 216–17, 226, 229, 285
tax arrears, 26, 29
Tax Code, 18, 84
tax evasion, 25, 74, 285
TFP, see total factor productivity
theory of property rights, 90
three-stage least squares estimation/
regression, 114
tobit estimation/regression, 126
total factor productivity, 8, 214, 225–8
transaction cost, 73, 260
transformation rent, 24, 26
transformational recession, 106
transition firm, 12, 20, 26, 31, 33
transparency, 22, 44, 70, 84, 106, 180,
188, 191, 193, 199, 200, 272, 281,
289, 303
trust, 116, 122, 149, 155, 161, 168, 177,
260, 281
t-test, 78, 126
two-stage least squares estimation/
regression, 112, 114, 126
two-stage probit estimation/regression,

79, 83, 85
two-step estimation method, 253
UES, see Unified Energy System
Unified Energy System, 230, 240, 243
Union of Soviet Socialist Republics, 5,
14–17, 19, 33, 258, 313
USSR, see Union of Soviet Socialist
Republics
9780230_217287_17_ d. dd 325 5/12/2009 5:41:33 PM
326 Index
vote-counting analysis, 127–8, 145
voucher privatization, 17, 21, 42, 69, 180
VTB, see Bank for Foreign Trade
Welch test, 78
White estimator, 79
Wilcoxon rank-sum test, 78, 94
workers’ joint-stock company, 132, 145
Yukos, 19, 277, 285–6
9780230_217287_17_ d. dd 326 5/12/2009 5:41:33 PM