Corporate Ownership and Governance in Russia

This article investigates the impact of privatization on managers' behavior, considering both the unique features of the Russian reality and general theoretical issues in property rights and economic behavior. Our analysis was primarily concentrated on corporate ownership structure as the derivative of managers' primary interest in corporate control, on the approaches they employ in order to satisfy their primary interests, and on sources on managers' power. Attention then was directed to the relationship between the ownership structure and governance potentials of different groups of investors. The results of the study conclude that (1) the initial attempt to separate ownership and control in order to increase managers' incentives to be concerned about accounting numbers has not been successful; (2) currently, managers have a negative attitude toward any actions, which could alter their powerful position and the distinctive socio-economic environment in Russia provides enough incentives to ensure that the managers' behavior remains consistent with their desire to keep control of the corporate leadership; (3) corporate behavior during the transition period will not necessarily vary with changes in the structure of corporate ownership toward giving a greater power to outsiders, due to the very specific relationship between inside and outside owners.