Institutional concentration and domestic firm investment decisions in Belarus (original) (raw)
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Enterprise restructuring in Belarus
2006
We explore the impact of privatization and the entry of new firms on enterprise performance in Belarus, a transition economy in which reform and market-orientated institutional development has been limited. We hypothesize that private ownership will enhance company performance, measured in a variety of ways including profitability and capacity to export to the West, and that newly created firms will perform better than state-owned ones. Our work is based on a large enterprise level survey which includes state-owned firms, privatized companies and newly created enterprises. The data refute both hypotheses. We conclude that this is probably because the institutional environment has not evolved sufficiently from the socialist era to permit free competition and effective governance by new owners. JEL Classification: P2, P31, L1
Regime-sanctioned oligarchs. Big business in Belarus
Sprawy Międzynarodowe, 2021
No oligarchic system, similar to those in Ukraine or Russia, developed in Belarus after 1991, but the formation of a group of prominent regime-linked bsinessmen has accelerated in recent years. They owe their infl uence to informal concessions from the regime to do business in selected sectors of the economy. They often do not take over state property but act as intermediaries, earning a hefty commission for doing so. They also operate in the criminal sphere, primarily involving the large-scale smuggling of goods into Russia and the European Union. This article aims to show the evolution and specifics of big business in Belarus. The growing capital potential of big Belarusian businessmen, estimated at a dozen or so, and their rising infl uence on the economic decisions made by the authorities while maintaining total political loyalty, make it justified to call at least some of them oligarchs. The system emerging in Belarus bears certain similarities to some post-Soviet oligarchic systems while having its own distinctive features. The accumulated capital and contacts give at least some of the emerging Belarusian oligarchs a good starting position for taking a front seat in a possible future political transformation, should the conditions arise for that to begin.
Mitigating constraints on investment: Transparency and ownership in the Russian Market
This study examines the impact of corporate governance on fixed investment utilizing the unique features of the Russian capital market. I apply firm-level transparency and disclosure (TD) scores as the primary proxy for corporate governance, supported by shareholder ownership structures. I find that TD has a positive and significant impact on fixed investment. However, my findings indicate that for oligarch-owned firms, this relationship might be curvilinear. State owned enterprises (SOEs) are more sensitive than oligarch-owned enterprises to improved governance, but less sensitive to the changes in internal funds (cash-flows). For firms with extreme TD scores e.g. which show a very low TD score or a very high score, the TD-investment relation appears to be concave. I find robust evidence that governance of financially constrained firms positively affects investment. Governance, therefore, is a valid mechanism for reducing financing constraints on investment. The empirical analysis is conducted on a novel hand-collected panel dataset of largest listed Russian companies during 2002-2009. Robustness checks and controls for endogeneity include dynamic panel generalized method of moments (GMM), difference-in-difference estimator (DID) based on an exogenous event, and vector autoregression techniques. Keywords: Corporate governance; Investment; Financing constraints; ownership; Russia
This paper is devoted to analyzing the evolution of corporate governance mechanisms in Russia. Special attention is paid to the causes of dramatic discrepancies between the expected outputs of institutional reforms implemented by the Russian government with the World Bank and IMF support and the actual behavior of Russian companies. Why was the model of interaction between enterprises and investors, owners and managers which had been successful in other countries actually rejected by Russian business in the 1990's? And how can we evaluate certain positive change that has occurred recently in corporate policies of major Russian companies? The answer to these questions is given based on analysis of economic agents' motivation at different stages of development of corporate structures in Russia. The paper argues that the need of comprehensive organizational and technological restructuring of enterprises caused the need to have a concentrated ownership structure. The formation of such a structure in the late 1990's (which occurred, in fact, contrary to the government's activities) created preconditions for extending the horizon of interests of dominating owners and managers and for positive qualitative changes in the relations between major Russian companies and their shareholders and investors.
Institutions, business and the state in Russia
Institutions, business and the state in Russia, 2003
THIS ARTICLE LOOKS AT LINKS between firms’ behaviour and the institutional set-up in Russia. It seeks to achieve two objectives. The first is to demonstrate that an institutional approach may achieve what the neoclassical approach has largely failed to accomplish, i.e. explain the factors that forced a great number of firms in Russia to delay restructuring and other anticipated responses following privatisation and price liberalisation. The second objective is to show that the intentional weakening of the economic and administrative role of the state in the early stages of reforms has deepened the institutional crisis and increased the economic and social cost of transition. There is growing consensus that one of the main causes of the shortage of market-type response is the frailty of market-based incentives. The new institutional economics proposes to view the inadequacies of the domestic system of institutions (which may be defined as the rules of the game in the society or, more formally, the humanly devised constraints that shape human interactions) as a factor that does not allow market incentives to reveal their strength. In fact, one of the reasons for some of the idiosyncratic practices of Russian companies is the fear that under present conditions market-type behaviour may bring losses rather than rewards. Accordingly, this article argues that the central issue of the current stage of reforms is to secure a move from an interim institutional system that emerged spontaneously in the early 1990s to an up-to-date system that can help consolidate the achievements of reforms and bring Russian capitalism into the modern age. Currently institutions in Russia maintain features that came into being as a reaction to some very specific challenges of post-communist reconstruction. As a result the evidence that the current institutional environment has ceased to help the progress of the Russian economy should not come as a surprise. As this article will demonstrate, the present institutional arrangements in Russia reflect the drawbacks and weaknesses associated with a period of systemic change, such as domination of short-term interests, poor access to business information, lack of trust, collapse of traditional business ties, parallel existence of incompatible business cultures etc. These features made inevitable the introduction of makeshift solutions, in particular because the state as an active force in creating an institutional set-up had been weakened and was reticent during this period. However, the article aims to demonstrate that these arrangements have reached the limits of their efficiency and have become a barrier to further development as they fail to institutionalise economic conflict and provide a solid and cost-effective foundation for market transactions. The institutional framework in Russia has to be modernised and this leads to the difficult question of how this should be done. It is only natural to look at the dichotomy of evolution and deliberate action. Can economic growth on its own change institutional set-up? What should be the force behind institutional reforms? As a contribution to the transition debate this article will specifically address the issue of whether and to what degree the state may be trusted with this task in Russia.
SSRN Electronic Journal, 2000
In this paper we analyze interrelations between ownership structures, corporate governance and investment in three transition countries: Russia, Ukraine and Kyrgyzstan. In contrast to most empirical papers on corporate governance, we study companies with very little exposure to public financial markets. Our empirical analysis is based on two years of data obtained through large-scale surveys of firms. Ukrainian companies appear to have the best corporate governance practices, while Russian companies -the worst. We find that the relationship between ownership concentration and corporate governance is non-linear. In Russia, the relationship between the share of the largest non-state shareholder and corporate governance is either positive or insignificant when the blockholder's stake is below a certain threshold; however, a further increase in the blockholder' share is associated with worsening corporate governance. We find a similar effect in Ukraine, but only for managerial ownership. In both countries, corporate governance improves as the combined share of small shareholders grows. No robust effects of the ownership structure are found for Kyrgyz firms. Further we show that the market for corporate control seems to have little relationship to the firms' corporate governance practices. We find no link between the quality of corporate governance and either the need for outside finance or actual investments financed with outside funds in either of the three countries.
The state and company managements in Belarus
Comparative Capitalism and the Transitional Periphery
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