Corporate Governance in Russia

Corporate Governance in Russia Professor Eva Liljeblom, Hanken Corporate governance can be defined as the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. Corporate governance mechanisms include the investor protection by the legal system, ownership control issues including the role of the board, the functioning of the market for corporate control, and incentive contracts. In Russia, the level of protection provided by the legal system has typically been low, although the situation is improving. Typical findings are also a highly concentrated ownership and a restricted use of external funding. Then the role of the board becomes even more important. Also, the information asymmetries between the management and the controlling owners, versus outside investors can become large and may constitute a main reason for the low level of external funding. The purpose of this project is to study issues which appear critical in the Russian case.