Corporate Governance In Russia Research Articles

Prospects for Sustainable Corporate Governance in Russia Based on Integrated Communications

The article presents the author’s understanding of the terms “corporate governance”, “corporate management” and “communication management” in the context of the concept of sustainable development, the ESG agenda and sustainable corporate governance, as well as their relationship. The role of the stakeholder approach in bringing together the content of the concepts of “corporate governance” and “integrated communications” is shown. Some features of communications management in Russia, including in the context of ESG, are examined in detail. The relevance of the study is due to the fact that many Russian companies and organizations are extremely slow to implement the principles and methods of integrated communications and sustainable corporate governance, although they determine the effectiveness of theiractivities. The subject of the study is the system of sustainable corporate governance as part of the implementation of ESG principles in Russia. The purpose of the article is to show Russian stakeholders the role of integrated communications in the development of sustainable corporate governance and ESG policies using research methods such as analysis of scientific papers on the research topic, comparison, generalization, systemic and logical analysis. The scientific novelty of the publication is justified by the author’s interpretation of the variants of understanding the terms, for example, the authors of the article consider the organizational and/or functional division of communications into internal and external to be unproductive. In addition, in order to modernize the methodology for rating and auditing companies and organizations for compliance of their activities with ESG principles, the authors propose to increase the number of management criteria of block “G”, using metrics for assessing the effectiveness of integrated communications management, taken from the “corporate management” and “communications” systems management». The practical significance of the work lies in the possibility of its use in the development of integrated communications systems within the framework of sustainable corporate governance, as well as in the course of modernizing the methodology for rating and auditing ESG policies in Russian companies and organizations. A further direction of research may be related to the development of criteria and indicators of the quality of integrated communications systems and sustainable corporate governance, as well as consideration of the characteristics of Russian communications practices in the business environment.

Институт «номинальный руководитель компании»: сущность, формы, мотивы и риски применения

The article is a multidimensional study of the institution of figurehead in the contexts of Russian corporate governance, legal regulation and judicial enforcement. Applying analytical methods of scientific research to analyze the institution of figurehead, the author seeks to consider various aspects of this institution, including its essence, forms, motives for use, punishability and associated risks. The work reveals the approach of Russian judicial practice to the definition of a “nominal leader” as a formal, not actual leader. The author hypothesizes that shadow corporate governance is one of the subsystems of the domestic shadow economy, and that “nominal management of the company’s operating practices” is a class of diverse structures, the generation of one part of which pursues frankly destructive goals in social terms, the other is situationally reasonable. Analyzing scientific publications, legislative acts, and judicial practice, the authors reveal individual forms of nominal management of a company: nominal shareholder, nominal company, nominal corporate act, nominal member of the board of directors, “multi-machine operator”, “technical premier”, member of the family business team, the executor of the instructions of the team of actual leaders, the textbook nominal director and situational-transit versions of the nominal leadership. The article highlights the risks of using forms of figurehead: a fundamental change in law enforcement practice, loss of time for management approvals, loss of confidential information, reputational and entrepreneurial, loss of business, withdrawal of assets and raider takeover. Administrative-legal, expert and corporate approaches are described in the discussion about the limits of punishment for “nominalities”, emphasizing the paradoxical nature of the institutional interpretation of the phenomenon of nominalities. In general, the article offers a broad scientific and applied discussion on interdisciplinary methodological grounds.

The Impact of Integrated Business Communications on the Success of Enterprises and Organizations

This paper evaluates the impact of business communications on the performance of companies and organizations and briefly outlines the history of the formation of the conceptual apparatus in the process of integrating integrated communications. Their role in corporate governance, as well as in the implementation of the ESG agenda in Russia, is considered. The relevance of the study is determined by the accelerated changes in the concepts of communication integration, the constant updating of forms, methods, tools and technologies, as well as the ambiguity of interpretations and the insufficient development of methodological approaches, which requires a new understanding of their content and implementation possibilities. The similarities and differences between integrated marketing communications and integrated communications are analyzed, the uncertainty in the use of these concepts is shown, as well as the distinctive features of the latter, which interact with all groups of stakeholders. The subject of the study is the system of relations in the process of interaction of companies and organizations with all groups of stakeholders. The purpose of the article is to show the advantages and possibilities of practical application of integrated communications, as well as new approaches to management strategizing. The article uses such research methods as content analysis of scientific periodicals, comparative analysis of semantic constructions of terms, study of practical experience in managing communications of companies and organizations, criteria and indicators for assessing their quality. The current trends in the development of integrated communications and their growing influence on the performance of companies and organizations are shown. The scientific novelty of the publication is justified by the author’s interpretation of the process of communication integration. The analysis showed that in the methods for compiling ESG ratings, the set of criteria for assessing the quality of block “G” is limited to the indicators of corporate governance codes. Therefore, the authors propose to expand this set using metrics for assessing the effectiveness of integrated communications management taken from the “corporate management” and “communications management” systems. The practical significance of the work is the opportunity to attract the attention of stakeholders to the problem of integrated communications and expand the horizon of their perception in theory and practice. Further directions of research may be related to the consideration of the characteristics of Russian communications practices in the business environment. Effective integrated communications can play a key role in the development of sustainable corporate governance in Russia.

Особенности развития корпоративного управления в России в современных экономических условиях

This article is devoted to the analysis of the problems of corporate governance development in Russia in the current geopolitical situation. Currently, there is a certain dissonance in the trajectories of the development of the world and Russian economies in terms of their ESG transformation. If in the international economic space ESG factors of development are in the first place when making decisions about investing in projects and securities, then in Russian reality these factors do not find such interest from investors. In addition, one of the constituent factors of ESG transformation – corporate governance (G) – is undergoing significant changes in terms of regulatory regulation and practical use in Russia as part of the anti-sanctions policy. The impact of changes in Russian regulatory documents regarding the operation of corporate governance principles on changes in business value is analyzed. Proposals are made on the amendments to regulatory documents to mitigate their negative impact on the growth of business value. The aim of the research is to analyze legislative changes in the field of corporate governance in Russia and the impact of these changes on the formation of the business value of Russian companies. The objective of the research is to identify the factors influencing the change in the value of the business as a result of the adopted changes in the regulatory framework in the field of corporate governance in Russia. The research is based on a general scientific methodology involving the use of methods of systematic and comparative analysis, analysis and synthesis, methods and approaches of evaluation activities. Changes in regulatory documents in the area of corporate governance affect all seven principles of corporate governance under the Code of the Bank of Russia. These changes have both a positive and negative impact on the stock price and the value of the business. The article provides suggestions for leveling the negative impact of changes in regulatory documents in the field of corporate governance on the value of business.

Do Emerging Markets Succeed in Implementing Sustainability Principles in Infrastructure Finance? Evidence from Public-private Partnerships in Russia

This paper is the author’s contribution to existing literature on the evaluation of ways to co-create ESG benefits in the process of implementing a public-private partnership (PPP). The author developed his own ESG rating based on a sound set of indicators and an independent evaluation of publicly available information on sustainable development issues. For the purposes of compiling a rating, the specific issues relevant to the evaluation of a PPP project’s sustainability considerations in view of national agenda were analyzed. Based on an analysis of academic literature and publicly available information about similar ratings, the author proposes an approach to measuring these issues and incorporating the results in the integrated ESG impact rating. The developed ESG benefit evaluation instrument may be used by institutional, private and state PPP market participants for a comprehensive analysis of their investment activity. The case analysis of two PPP projects from Russian practice revealed failures in Russian corporate governance practices in the process of investing in infrastructure; in addition, we propose potential ways of overcoming some of the difficulties based on case comparison. This paper provides a new outlook on the methodology of a PPP-adjusted ESG rating that is relevant for evaluating and monitoring of corresponding investments in infrastructure.

Development of Russian Corporate Governance Practice: Strength Test (Review of the Round Table “Development of Russian Corporate Governance Practice: Strength Test”)

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Problems of integration of ESG standards into the practice of Russian corporate governance

Over the past decade and a half, interest in sustainable development topics and the principles of ESG has been consistently at a high level. A large number of foreign academic researchers and representatives of the business community consider these issues as the central theme of management science and practice in the current socio-economic realities. In general, it can be stated that in the paradigm of globalism, actively promoted by the United States and a number of its allies over the past two decades, the concepts of green transition, zero hydrocarbon footprint, gender, and racial diversity, specific requirements for CSR and other incarnations of ESG approaches were perceived as key to business success and competitiveness. To date, the globalist track of the development of the world economy is no longer considered as the only possible one and corresponding to the needs of the development of national economies. At the same time, it should not be denied that a number of provisions used in the ESG concepts are extremely rational and universal and, if applied correctly, can show an undoubted positive result. This work is devoted to the issues of effective integration of ESG standards in the current socio-economic conditions and the objective issues that accompany this process.

Transformation of corporate governance in the face of modern challenges

Russian generating companies in the power industry require a certain transformation of corporate governance to reduce the investment risks associated with today’s challenges in order to increase investment attractiveness. For this purpose, the paper examines the rotation of ownership in these companies, the updated methodology of the Bank of Russia for assessing corporate governance, including in the context of the ESG agenda, HR strategy and growing digitalization. The results of a general assessment of the corporate governance of generating companies are presented; an additional analysis of the compliance of companies with the criteria for each of the sections of the Russian Corporate Governance Code was carried out; a comparative analysis of the structural characteristics of the boards of directors of Russian generating companies and foreign companies that are similar in terms of concentration of ownership (Germany) and the presence of the state in it (France) was carried out; the article presents the results of the assessment of internal documents. The generalization of the obtained data makes it possible to formulate proposals for further transformations of corporate governance in generating companies in the face of modern challenges, including new corporate governance standards with a certain set of additional compliance criteria, reorganization of boards of directors by updating the structural characteristics of the board, as well as the composition and content of internal documents.

Corporate governance in generating companies of the Russian electric power industry in the context of ESG agenda

To address the issues of investment appeal in the Russian electric power industry, this study analyzes the dynamics of corporate governance, including permanent redistribution of property and compliance with the Russian Corporate Governance Code, in wholesale and territorial-generating companies. The increasing concentration of property in the hands of the state and its implications for investors are also noted. This study reveals the violations of essential principles, and the substantial differences in corporate governance practices, in the best- and worst-performing companies. Additional standards for better corporate governance practices to benefit the investors in the context of the current Environmental, Social, and corporate Governance (ESG) agenda are proposed. This study provides a new insight at the development of corporate governance in Russian power generating companies through property redistribution and compliance with corporate governance principles.

Legal Aspects of Corporate Governance in Russia

Corporate governance in Russia is subject to the present civil law provisions, contained in the Civil Code and laws regulating different forms of corporations, including companies, enacted in accordance with it, which concern governing bodies and decision-making procedures. The supreme governing body of the company is the general meeting of its participants, and the issues, which are within its exclusive authority, are enlisted in the law. A company must have an executive body that represents it. It may have also a collegiate executive body and a collegiate governing body for controlling the executive bodies. The members of the governing bodies are presupposed to act in good faith and reasonably, and they bear liability for negligence. The liability is personal as well as solidary (joint and several), but the persons who did not take part in the administration (or voted against) are not to bear liability. Characteristic for the liability of executives and representatives of company is, that their liability is to be realised simply at the moment when their duty to act in good faith and reasonably is violated. Keywords: Civil Law; Company; Governing Body; General Meeting; Decision- Making; Liability

Areas for development of corporate governance in Russia with regard to the escalation of international tension

Subject. The article investigates approaches to corporate governance in Russia in the context of international tensions. Objectives. The aim is to analyze policy of the Bank of Russia in the sphere of corporate governance. Methods. We employ general scientific research methods. Results. We performed an analysis of scientific and practical approaches to corporate governance, considered problems related to transparency of corporate governance. Conclusions. In the face of sanctions, Russian companies should strike a balance between the non-disclosure of important information about shareholders and top managers and the need to comply with corporate governance standards.

Compliance with corporate governance principles as element of Russian economy investment attractiveness

Over the last few years, the concept of corporate governance in relation to Russian economic realities has been used relatively recently. The concept of corporate governance in the economic practice of Russia was synonymous with production management in 1990-2000 At the same time, "good corporate governance" is a set of activities of public companies in order to ensure high demand for their shares and debt securities from portfolio investors. Corporate governance is a means of trust development both in individual companies and in the stock market of the country as a whole, which is of great importance for long-term investment attraction. According to various global ratings of the countries (for example, to the rating of the financial conglomerate Morgan Stanley, the Russian stock market is classified as an emerging market that provides increased investment returns. The article attempts to determine the main priorities of institutional investors for corporate governance in Russia. The authors come to the conclusion that the development of the corporate governance system is one of the key factors increasing the investment attractiveness of Russian companies. Government regulators take measures to create corporate governance standards, one example of which is the recommendation to use the Corporate Governance Code approved by the Board of Directors of the Bank of Russia in 2014. In fact, the article highlights both positive and negative trends in the Russian practice of corporate governance. It provides the results of opinion polls among investors, which reveal their motivation to make investment decisions in the Russian market.

The main trends in the regulation of corporate governance in Russia and abroad

Subject. This article discusses the development of corporate governance systems and new threats and opportunities for corporations. Objectives. The article aims to analyze the activities of regulators in the field of ecology, social responsibility, and corporate governance. Methods. For the study, we used analysis and synthesis. Results. Based on reviews of analytical materials, scientific articles, and data of international organizations and national regulators of Russia, the USA, Germany, and Japan, the article determines the features of the development of corporate governance in developed countries. Conclusions. The main trends in the regulation of corporate governance in developed countries, despite local differences, have common features related to the implementation of the principles of sustainable development and social responsibility of business.

The Impact of Corporate Governance on the Capital Structure of Domestic Companies

The choice of the optimal capital structure is one of the biggest challenges that the company’s top management faces due to the fact that the right strategy secures the company’s financial stability, sustainable development and capital-raising potential. This study aims at establishing a connection between the capital structure of Russian companies and corporate governance. Literature background of the paper consists of foreign and Russian authors’ works in the field of behavioral finance. Observations from 60 Russian companies were employed in the study. The major findings obtained by economic and mathematical modeling are as follows: 1. positive connection was established between the size of board of directors, number of independent directors and debt in capital structure; 2. positive connection between CEO’s age and short-term debt in capital structure; 3. no correlation between gender of directors and debt. The findings of this study may be used for determining the optimal capital structure strategy. Moreover, this information may be taken into account by top-management, directors, etc. for internal valuation of a company’s operations including sound valuation of the corporate governance factors that influenced the company’s capital structure.

Do the Minority Shareholders of Russian Corporations Need More Protection?

Russian corporate governance has traditionally been viewed as lacking in contrast to that of Western states. The major concern has been controlling shareholders’ expropriation of minority shareholders, especially in the setting of state-owned enterprises (SOEs). However, in recent years, the law and court treatment of minorities’ rights have taken a positive turn, drawing more investors to joint-stock companies (JSC), the Russian equivalent of US corporations. This article examines whether such developments sufficiently protect minority shareholders’ interests in the areas of (1) access to information, (2) controlling shareholder transactions, (3) takeovers by a controlling shareholder, and (4) dividend distributions. This article examines the formation and current state of the law and court practice in these areas, and proposes legislative reform, where appropriate. The article concludes that, although there is room for improvement, the law and the courts generally afford sufficient protections to minority investors, but the key factor that may boost the quality of corporate governance is minority shareholders’ active participation in corporate affairs, especially in the general meetings of shareholders. corporate governance, minority shareholder protection, Russian corporate law

Comparative Corporate Governance

The question how the governance of enterprises, including the governance of capital markets, should be arranged is as old as the market economy and capitalism itself. Reforms have been stimulated by recently corporate scandals that imposed a critical discussion on the way public corporations are directed and controlled. The literature on corporate governance (CG) originated in the US and the UK, and was initially concerned with a fairly narrow set of issues such as how shareholders can monitor and motivate management to act in their interests. This literature distinguishes between two dichotomous CG models. First, the shareholder-oriented model, which is characterized by strong shareholder rights, single powerful CEO and protection of minority shareholders, prevails mainly in Anglo-Saxon countries. Second, the stakeholder-oriented model, which is characterized by weaker shareholder rights, consensus leadership, and concentrated ownership, prevails in most of the European continent and Japan. For a number of reasons, comparative CG and convergence debates often take place within the contours of the cultural–institutional or societal approach used in this book. Since institutionalists and the societal approach stresses the embeddedness of national institutions and ‘complementarities’ between institutions, alternative responses to internationalizing capital markets, other than convergence, appear possible. Companies may respond very differently to similar sorts of pressure, and distinct sets of ‘best practice’ contingent on the national context may emerge. The current chapter applies this approach by examining the interaction between CG aspects in large, small and medium-sized firms and national institutions in different countries, in the context of internationalizing capital markets. By adopting an institutional approach, the first section describes the major CG features influencing post-war company decision-making in advanced economies. The in-depth explanation of the two main models is followed by an analysis of the Japanese CG model, which is argued to be similar to the Rhineland model. The second section explores the continental European models, which are variants of the two main models. The analysis shows that variations among the advanced and transition economies in these CG features stem from differences in key societal institutions, such as governmental regulation, the character of the financial system, corporate law, and cultural values. In the third section, we offer a brief overview of the models of CG in BRIC countries and more specifically, we discuss in the form of case studies, CG in Russia and China. The fourth section deals with the worldwide diffusion of CG codes, which are instruments of self-regulation, defining best practices with respect to boards, management, supervision, disclosure and auditing. We discuss the main drivers of their diffusion and characteristics across countries, as well as the possible convergence of CG best practices. Finally, the closing case, dealing with the Ahold scandal, should be seen in the light of the link between CG and CSR. The chapter concludes with the major strengths and weaknesses, as well as future directions of change in both CG models.

Current trends in Russian corporate governance

Current trends in Russian corporate governance

СОВРЕМЕННЫЕ ТЕНДЕНЦИИ РОССИЙСКОГО КОРПОРАТИВНОГО УПРАВЛЕНИЯ

The importance of modern corporations is huge both in the world and in the Russian economy. Today, corporate governance is the most important institution that is able to regulate relations in the corporation. Due to a number of events taking place in the economic and geopolitical sphere, it is possible to notice a significant change in the course of corporate governance development. The purpose of this article is to identify and analyze the current trends in the development of Russian corporate governance. During the research, materials from open access, reports of Russian corporations, and the works of domestic economists in the field of corporate governance were used. The identified trends in the development of corporate governance are the results of this work. Among them, first of all, it is necessary to highlight the expansion of the target orientation of modern organizations, the beginning of the dominance of environmental and social goals in the development agenda of corporations. The focus on digitalization comes to the second level as a trend. And the diversification of the corporation’s activities through the creation of its own ecosystems is the third trend in the development of modern corporate governance. The fourth trend in this work was highlighted by a decrease in activity on the stock markets on the part of Russian corporations.

Corporate disclosure, compliance and consequences: evidence from Russia

Does the introduction of corporate transparency and disclosure rules in emerging economies affect compliance, and therefore earnings quality and firm performance? We explore these questions for an important emerging economy, Russia, using a natural experiment, the 2002 introduction of Russian corporate governance code. We exploit the exogenous variation in voluntary disclosure and find a significant increase in corporate disclosure among the domestic Russian firms over the period 2003–2007 when firms gradually adopted some but not all disclosure rules. The immediate effect of the introduction was a drop in reported earnings. Market valuation, however, only improved for domestic firms after 2007, when all domestic firms had complied. However, cross-listed firms, which were already satisfying international standards, remained largely unaffected. Though average compliance by domestic firms was only 53%, average firm value of treated domestic firms, relative to cross-listed ones, went up by about 10%. Results are robust, confirm external validity and offer important policy implications for other emerging/ transition economies.

State Corporate Governance in Russia

It is no secret that the modernisation process in Russia via state-owned companies has run into a dead end. A full understanding of this stagnation requires an investigation of the governance systems and the changes going on behind them. Using the example of the two most important state-owned companies of the aviation sector, the JSC United Aircraft Corporation (UAC) and the non-profit organisation (state corporation—Gosudarstvennaya Korporatsiya) Rostec, this article shows the main differences in state corporate governance systems, identifying a presidential and a governmental governance system. In the context of this work, the term governmental is limited only to the federal cabinet and its administrations, thereby creating an awareness that different executive state bodies can exercise different forms of state governance. Overall, the sector is characterised by growing informalisation and industrial incorporation.