The Structure of Corporate Boards and Private Benefits of Control: Evidence from the Russian Stock Exchange

42 Pages Posted: 15 Oct 2013

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: October 2013

Abstract

This paper revisits the role of board size and composition in corporate governance using a measure of private benefits of control (PBC) as indicator of governance problems in firms. We calculate PBC using the voting premium approach for a sample of dual class stock companies traded on the Russian stock exchange between 1998 and 2009. Using fixed-effects regressions, we find a quadratic relationship between PBC and board size, implying the optimality of medium-sized (about 11 directors) supervisory boards. This result is substantially stronger for PBC than for traditional measures of corporate performance. There is also some evidence that director ownership helps mitigate governance problems. Most remarkably, we find that non-executive/independent directors are associated with larger PBC and thus do not seem to help improve corporate governance. In contrast, regressions with accounting performance measures as dependent variables tend to suggest a positive role of these directors in corporate governance.

Keywords: board size, board independence, private benefits of control, dual-class stock companies, Russia

JEL Classification: G34

Suggested Citation

Muravyev, Alexander and Berezinets, Irina and Ilina, Yulia, The Structure of Corporate Boards and Private Benefits of Control: Evidence from the Russian Stock Exchange (October 2013). Available at SSRN: https://ssrn.com/abstract=2340392 or http://dx.doi.org/10.2139/ssrn.2340392

Alexander Muravyev (Contact Author)

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

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

Volkhovsky Per. 3
St. Petersburg, 199004
Russia

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