Abstract
The essay describes the current state of corporate governance in Russia and the dynamics of recent years. Important features of the environment that affect corporate governance include weak legal institutions that lead to high private benefits to control, underdeveloped capital markets, high levels of ownership concentration, and significant state involvement in business. In this situation, the main conflict of interest is not between a manager and many dispersed shareholders but between large and small shareholders, different large shareholders, and minority shareholders and managers/board members in state-owned companies. Many of these features are similar to other emerging markets but are substantially different from conditions faced by firms in developed countries. Despite substantial improvement during the 2000s, the quality of corporate governance in Russia is much lower than in developed countries, primarily because of the low quality of Russian institutions.
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