Profit or Politics? Understanding Renationalizations in Russia

37 Pages Posted: 2 Mar 2010 Last revised: 9 Mar 2016

Date Written: November 12, 2009


This study tests alternative hypotheses about firm-level determinants of the government incentives to acquire controlling stakes in private companies. Using a novel hand-collected dataset of 153 largest listed and unlisted Russian companies, I investigate the economic and political rationale of a 2004-2008 wave of selected nationalizations and provide new evidence on the methods and characteristics of such takeovers in a post-privatization emerging market. I find that formerly privatized companies in strategically important sectors face the highest risks of corporate control transfers from private to state hands. I also find that contrary to commonly held beliefs, there is little evidence that renationalizations in Russia are driven by economic factors: the government neither systematically “cherry-picks” best performers nor addresses market failures by rescuing underperformers. These results contribute to the politics and finance literature by providing new firm-level evidence on the importance of political rationale in the government’s decision to intervene into the corporate control structures.

Keywords: Nationalization, Political economy, Strategic sectors, National champions, Russia

JEL Classification: F52, G34, L33, P26

Suggested Citation

Chernykh, Lucy, Profit or Politics? Understanding Renationalizations in Russia (November 12, 2009). Journal of Corporate Finance vol. 17, pp. 1237-1253, 2011, Available at SSRN:

Lucy Chernykh (Contact Author)

Clemson University ( email )

School of Accountancy and Finance
Clemson, SC 29634
United States

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