The Evolution of Corporate Governance in the Global Financial Crisis: The Case of Russian Industrial Firms

Ichiro Iwasaki and 一郎 岩﨑

No 2016-7, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: In this paper, using a unique dataset of industrial firms obtained from enterprise surveys conducted across the Russian Federation in 2005 and 2009, we trace back structural changes in the corporate governance system before and after the global financial crisis. We also empirically examine the impacts of the crisis on the organization of boards of directors and audit systems. Our survey results reveal that, in the Russian industrial sector, the quality of corporate governance has been improved through the crisis. Furthermore, we found that, corresponding to the alignment hypothesis, in firms that decisively reformed their management and supervisory bodies in response to the 2008 financial shock, the total number of worker representative directors significantly declined, as did their proportion to all board members. On the other hand, we also found that, in firms that substantially reorganized their audit system to cope with the crisis, the independence of the audit system was undermined remarkably, corresponding to the expropriation hypothesis. Findings that management behaviors predicted by the two conflicting hypotheses are simultaneously detected—and that their targets are significantly different—deserve special mention.

Keywords: global financial crisis; the evolution of corporate governance; alignment versus expropriation; Russia (search for similar items in EconPapers)
JEL-codes: D22 G01 G34 M42 P34 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2016-09
New Economics Papers: this item is included in nep-cfn, nep-cis and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2016-7

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