Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/58818 
Year of Publication: 
2012
Series/Report no.: 
IZA Discussion Papers No. 6519
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper examines whether the introduction of corporate governance (CG) reforms in general and that of transparency and disclosure (T&D) rules in particular can necessarily boost firm performance. Existing literature suggests that CG reforms can boost performance because it can resolve the conflict of interest between the controlling and the minority owners, especially in societies with highly skewed distribution of ownership. We however argue that the success of CG reform would, in addition, depend on whether the reforms may initiate further conflict, e.g., that between the state and the controlling owners. Using recent data from Russia for 2000-2008, we find that the introduction of corporate governance codes in Russia had limited success to improve indices of firm performance in our sample. We argue that this arises from the predatory behavior of the central and local governments: greater transparency make businesses easy targets for aggressive tax enforcement policy by the central government while the decentralized local governments may increase the bribe price to protect businesses from high central taxes, which may also induce some businesses to go underground, thus harming firm performance.
Subjects: 
corporate governance reform
transparency and disclosure rules
conflict between state and the controlling owner
taxation and fiscal decentralisation
firm performance
predatory state
Tobin's Q
Russia
JEL: 
G3
K2
P2
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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