Kate Bishop

Is Stakeholder Corporate Governance Appropriate in Russia

Alternative forms of disciplining the actionsof senior enterprise managers can becharacterized as shareholder or stakeholdergovernance. This paper analyzes thecontingencies that favour different forms ofgovernance and addresses the question: doesRussia need a stakeholder-oriented model ofcorporate governance? The appropriateness ofdifferent governance regimes under variouscontingent situations are analyzed both ingeneral and with respect to Russia. We suggestthat contingent factors argue for theco-existence of two different governancemechanisms in Russia based on sectoraldifferences. Survey evidence is used to examinepatterns of Russian bank, employee and Statestakeholding behaviour and shows that, apartfrom managers, these stakeholders at present donot have a significant involvement indecision-making in the majority ofmanufacturing firms. Given institutionalweaknesses in Russia, a case may be made forthe State to have a role to play incounterbalancing dominant insider shareholdersand enforcing good corporate governanceprinciples.

Endogenous Ownership Structure: Factors Affecting the Post-Privatisation Equity in Largest Hungarian Firms

Using a data set for the 162 largest Hungarian firms during the period of 1994-1999, this paper explores the determinants of equity shares held by both foreign investors and Hungarian corporations. Evidence is found for a post-privatisation evolution towards more homogeneous equity structures, where dominant categories of Hungarian and foreign owners aim at achieving controlling stakes. In addition, focusing on firm-level characteristics we find that exporting firms attract foreign owners who acquire controlling equity stakes. Similarly, firm-size measurements are positively associated with the presence of foreign investors. However, they are negatively associated with 100% foreign ownership, possibly because the marginal costs of acquiring additional equity are growing with the size of the assets. The results are interpreted within the framework of the existing theory. In particular, following Demsetz and Lehn (1985) and Demsetz and Villalonga (2001) we argue that equity should not be treated as an exogenous variable. As for specific determinants of equity levels, we focus on informational asymmetries and (unobserved) ownership-specific characteristics of foreign investors and Hungarian investors.

Foreign partners in the Former Soviet Union

Building links with foreign partners offers major potential for the development of economies in transition. However, in transition economies, old institutions still exert a strong influence on business decisions, posing problems for the development of these links. This paper analyzes the presence of foreign partners in the firms of transition economies, and focuses on the influences on foreign partner presence. We emphasize the need for international executives and researchers to understand the heterogeneity of different countries within apparently similar regions. Surveys using longitudinal, multi-industry data from 152 newly privatized firms in Russia, Ukraine and Belarus show that the presence of a foreign partner is positively associated with managements desire for access to foreign markets, and with existing export intensity. If the enterprise is located in Russia, foreign partner presence is also positively associated with replacement of the chief executive, and with the amount of investment required. The presence of a foreign partner is found to be negatively associated with directors giving priority to strategies to develop domestic markets, with an enterprise already having greater than average foreign ownership and positively with the company being perceived to be attractive to a potential foreign partner because it provides access to local technology. There is also a worrying reduction in the presence of foreign partners over time although enterprise managers appear to becoming more realistic about the attractiveness of their firm to foreign partners.

Wage Determination: Privatised, New Private and State Owned Companies. Empirical Evidence from Panel Data

This paper examines the determinants of wage pressure in large companies, including ownership characteristics and the impact of regional labour markets. By using a panel of 329 Polish largest firms during the period 1997- 2001, we find evidence of rent sharing activities, however there is also asymmetry in quasi rent elasticity of wages. The wage setting mechanism seems to differ between new private companies, privatised companies, state firms and mixed ownership. In particular, wages in state firms are highly responsive to regional labour market conditions, while firms in other sectors are not. Rent sharing is visible in both the state sector and new private companies, yet several specific characteristics differ. On the other hand, quasi rent elasticity appears to be suppressed in privatised companies.