CEO and Board Characteristics as Determinants of Private Benefits of Control: Evidence from the Russian Stock Exchange

53 Pages Posted: 8 Jan 2012

See all articles by Irina Berezinets

Irina Berezinets

Saint Petersburg State University - Graduate School of Management

Yulia Ilina

Saint Petersburg State University - Graduate School of Management

Alexander Muravyev

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

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: CEO, corporate board, private benefits of control, dual-class stock firms, Russia

JEL Classification: G34

Suggested Citation

Berezinets, Irina and Ilina, Yulia and Muravyev, Alexander, CEO and Board Characteristics as Determinants of Private Benefits of Control: Evidence from the Russian Stock Exchange. IZA Discussion Paper No. 6256, Available at SSRN: https://ssrn.com/abstract=1981212

Irina Berezinets (Contact Author)

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

Volkhovsky Per. 3
St. Petersburg, 199004
Russia

Yulia Ilina

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

Volkhovsky Per. 3
St. Petersburg, 199004
Russia

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

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