Owners, Boards, Managers and the Private Benefits of Control: A Study of Dual Class Stock Firms in an Emerging Market

51 Pages Posted: 21 Aug 2011

See all articles by Alexander Muravyev

Alexander Muravyev

Saint Petersburg Branch National Research University Higher School of Economics; Institute for the Study of Labor (IZA)

Irina Berezinets

Saint Petersburg State University - Graduate School of Management

Yulia Ilina

Saint Petersburg State University - Graduate School of Management

Date Written: August 20, 2011

Abstract

This paper investigates whether and how various characteristics of CEOs and corporate boards are related to the severity of corporate governance problems within firms. The latter is proxied by private benefits of control, which we measure for dual class stock firms using the voting premium approach. Our empirical analysis is based on data from Russia and takes advantage of the extreme corporate governance problems in the country, considerable variation in corporate governance practices across firms and over time, and presence of a large and exogenously created (during the process of privatization) group of dual class stock companies. The data are assembled from the RTS, SKRIN and SPARK databases and include over 200 firms observed in 1997-2009, with over 1000 observations in total. Our econometric analysis suggests a quadratic relationship between private benefits of control and CEO ownership with a minimum at about 4% CEO ownership, a positive association between CEO tenure and private benefits, and a quadratic in CEO age with a dip in private benefits at about 52 years of age. There is also a quadratic relationship between private benefits of control and board size, implying the optimality of medium-sized (about 9-10 directors) boards. We find no gender effects on private benefits of control.

Keywords: CEOs, corporate boards, private benefits of control, dual-class stock, Russia

JEL Classification: G34

Suggested Citation

Muravyev, Alexander and Berezinets, Irina and Ilina, Yulia, Owners, Boards, Managers and the Private Benefits of Control: A Study of Dual Class Stock Firms in an Emerging Market (August 20, 2011). 24th Australasian Finance and Banking Conference 2011 Paper, Available at SSRN: https://ssrn.com/abstract=1913244 or http://dx.doi.org/10.2139/ssrn.1913244

Alexander Muravyev

Saint Petersburg Branch National Research University Higher School of Economics ( email )

Kantemirovskaya str. 3a
St. Petersburg, 194000
Russia

HOME PAGE: http://https://www.hse.ru/en/org/persons/127811036

Institute for the Study of Labor (IZA) ( email )

Schaumburg-Lippe-Str. 5-9
Bonn, D-53113
Germany

HOME PAGE: http://www.iza.org/en/webcontent/index_html

Irina Berezinets

Saint Petersburg State University - Graduate School of Management ( email )

Volkhovsky Per. 3
St. Petersburg, 199004
Russia

Yulia Ilina (Contact Author)

Saint Petersburg State University - Graduate School of Management ( email )

Volkhovsky Per. 3
St. Petersburg, 199004
Russia

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
101
Abstract Views
604
rank
289,813
PlumX Metrics