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on Confederation of Independent States |
| By: | Simeon Djankov (The World Bank); Yingyi Qian (UC Berkeley and CEPR); Gerard Roland (UC Berkeley and CEPR); Ekaterina Zhuravskaya (New Economic School/CEFIR and CEPR) |
| Abstract: | We compare results from a pilot study on entrepreneurship in China and Russia. Compared to non-entrepreneurs, Russian and Chinese entrepreneurs have more entrepreneurs in their family and among childhood friends, value work more relative to leisure and have higher wealth ambitions. Russian entrepreneurs have a better educational background and their parents were more likely to have been members of the communist party but Chinese entrepreneurs are more risk-taking and greedy and have more entrepreneurs among their childhood friends. |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0049&r=cis |
| By: | Simeon Djankov (The World Bank); Edward Miguel (UC Berkeley and NBER); Yingyi Qian (UC Berkeley and CEPR); Gerard Roland (UC Berkeley and CEPR); Ekaterina Zhuravskaya (New Economic School/CEFIR and CEPR) |
| Abstract: | Social scientists studying entrepreneurship have emphasized three distinct sets of variables: the institutional environment, sociological variables, and personal and psychological characteristics. We are conducting surveys in five large developing and transition economies to better understand entrepreneurship. In this short paper, using over 2,000 interviews from a pilot study in Russia, we find evidence that the three sets of variables matter: perceptions of the local institutional environment, social network effects and individual characteristics are all important in determining entrepreneurial behavior. |
| JEL: | M13 P12 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0048&r=cis |
| By: | Tuuli Juurikkala (Bank of Finland Institute for Economies in Transition); Olga Lazareva (CEFIR) |
| Abstract: | In the planned economy firms were made responsible for providing their workers with social services, such as housing, day care and medical care. In the transforming Russia of the 1990s, social assets were to be transferred from industrial enterprises to the public sector. The law on divestment provided little more than general principles. Thus, for a period of several years, property rights concerning a major part of social assets, most notably housing, were not properly defined, as transfer decisions were largely left to the local level players. Strikingly, the time when assets were divested varied considerably across firms. In this paper we utilize recent survey data from 404 medium and large industrial enterprises in 40 Russian regions and apply survival data analysis to explore the determinants of divestiture timing. Our results show that in municipalities with higher shares of own revenues in their budget and thus weaker fiscal incentives, firms used their social assets as leverage to extract budget assistance and other forms of preferential treatment from local authorities. We also find evidence that less competitive firms were using social assets to cushion themselves from product market competition. At the same time, we do not find any role for local labor market conditions in the divestment process. |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0061&r=cis |
| By: | Andrei Rachinsky (New Economic School/CEFIR) |
| Abstract: | Managerial entrenchment, an undeveloped market for top managerial labor force and the absence of clear market signals could prevent owners from firing management for poor performance. Top managerial turnover could improve firms’ performance by introducing new human capital and providing good incentives for a new manager if the previous CEO has been fired for poor performance. We evaluate the effectiveness of selfenforced corporate governance mechanisms by determining the causes of top management turnover and estimating consequences of management turnover on the subsequent corporate performance. We track all turnovers of CEO’s in the 110 largest Russian companies during a five year period (from 1997 to 2001) and classify each case of turnover according to the new position of the prior CEO and the origin of the new director. |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0051&r=cis |
| By: | Bernard S. Black (University of Texas at Austin); Inessa Love (The World Bank); Andrei Rachinsky (New Economic School/CEFIR) |
| Abstract: | There is increasing evidence that broad measures of firm-level corporate governance predict higher share prices. However, almost all prior work relies on cross-sectional data. This work leaves open the possibility that endogeneity or omitted firm-level variables explain the observed correlations. We address the second possibility by offering time-series evidence from Russia for 1999-present, exploiting a number of available governance indices. We find an economically important and statistically strong correlation between governance and market value in OLS with firm clusters and in firm random effects and firm fixed effects regressions. We also find significant differences in the predictive power of different indices, and in the components of these indices. How one measures governance matters. |
| Keywords: | Russia, corporate governance, corporate governance index, law and finance, firm valuation, disclosure, emerging markets |
| JEL: | G32 G34 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0053&r=cis |
| By: | Alexander Dyck (University of Toronto); Natalya Volchkova (New Economic School/CEFIR); Luigi Zingales (Harvard University, NBER, and CEPR) |
| Abstract: | We study the effect of media coverage on corporate governance outcomes by focusing on Russia in the period 1999-2002. Russia provides a setting with multiple examples of corporate governance abuses, where traditional corporate governance mechanisms are ineffective, and where we can identify an exogenous source of news coverage arising from the presence of an investment fund, the Hermitage fund, that tried to shame companies by exposing their abuses in the international media. We find that the probability that a corporate governance abuse is reversed is affected by the coverage of the news in the Anglo-American press. The result is not due to the endogeneity of news reporting since this result holds even when we instrument media coverage with the presence of the Hermitage fund among its shareholders and the “natural” newsworthiness of the company involved. We confirm this evidence with a case study. |
| Date: | 2004–10 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0054&r=cis |
| By: | Andrei Shumilov (CEFIR); Natalya Volchkova (New Economic School/CEFIR) |
| Abstract: | Numerous evidence demonstrate that firms affiliated with business groups in emerging markets outperform their independent counterparts. One of the proposed explanations for such a phenomenon is the more advanced groups’ internal markets structure compared to the rest of the economy. In this paper we test the hypothesis that internal capital markets within Russian business groups overcome the liquidity constraints problem widely spread outside groups. Our findings indicate that even if the groups’ internal capital markets do exist in Russian business groups, their efficiency is rather doubtful and the access to external financing by firms affiliated with the groups is constrained. |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0050&r=cis |
| By: | Tuuli Juurikkala (Bank of Finland Institute for Economies in Transition); Olga Lazareva (CEFIR) |
| Abstract: | Just as in established market economies, many Russian firms provide non-wage benefits such as housing, medical care or day care to their employees. Interpreting this as a strategic choice of firms in an imperfect labor market, this paper examines unique survey data for 404 large and medium-size industrial establishments from 40 Russian regions. We find strong evidence that Russian industrial firms use social services to reduce the costs of labor turnover in the face of tight labor markets. The strongest effect is observed for blue-collar workers. We also find that the share of non-monetary compensation decreases with improved access to local social services. |
| Keywords: | Non-wage benefits, labor turnover, labor attachment, Russia |
| JEL: | J32 J33 J42 J63 M52 P31 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0062&r=cis |
| By: | Irina Tytell (International Monetary Fund); Ksenia Yudaeva (New Economic School/CEFIR) |
| Abstract: | Policymakers around the world introduce special policies aimed at attracting foreign direct investments (FDI). They motivate their decision by the spillover effect, which FDI have on domestic companies. Empirical literature so far has failed to find any robust evidence of this effect. In this paper, we make an attempt to explain this finding. Using data from Poland, Romania, Russia, and Ukraine, we demonstrate that not all FDI have positive spillover effects on domestic firms. Spillovers are positive only in the case of export-oriented FDI and, more generally, are driven by the more productive foreign companies. Moreover, effects of FDI on domestic firms are not limited to knowledge spillovers: exposure to foreign technologies alters the form of their production functions. Specifically, foreign entry is associated with higher capital intensity and lower labor intensity of domestic firms in relatively more developed countries, such as Poland, while the opposite is the case in the less developed countries, such as Russia. These results are subject to threshold effects: benefits are more likely to materialize once a relatively large stock of foreign capital is accumulated. Absorptive capacity of domestic firms plays a crucial role in reaping the benefits of FDI. Both, knowledge spillovers and production function changes, occur predominantly in the more educated and the less corrupt regions. |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0060&r=cis |