 Corporate Governance and Investment: Evidence from Russian Unlisted FirmsCarsten Sprenger and Olga Lazareva HSE Working papers from National Research University Higher School of Economics Abstract: This paper investigates how corporate governance of unlisted firms in an emerging market economy affects financing constraints, measured by the sensitivity of investment to cash flow. We develop two original corporate governance indices based on a large-scale survey of Russian enterprises – one for shareholder protection and one for transparency. We estimate standard investment regressions where the cash flow variable is interacted with our corporate governance indices and variables capturing the ownership structure. The central result is that better shareholder protection diminishes the cash flow sensitivity of investment, particularly in firms with an outside controlling owner and in firms with low managerial ownership. In contrast, more transparency exacerbates financing constraints in some cases. We address the problem of the endogeneity of corporate governance by using fixed-effects regressions and a novel instrumental variable based on particular legal provisions for corporate governance in Russia depending on the number of shareholders Keywords: corporate governance; shareholder protection; transparency; financing constraints; ownership structure. (search for similar items in EconPapers) Published in WP BRP Series: Economics / EC, March 2017, pages 1-52 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:160/ec/2017 Access Statistics for this paper More papers in HSE Working papers from National Research University Higher School of Economics |
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