The structure of corporate boards and private benefits of control: Evidence from the Russian stock exchange

Alexander Muravyev, Irina Berezinets and Yulia Ilina
Authors registered in the RePEc Author Service: Александр Муравьев

International Review of Financial Analysis, 2014, vol. 34, issue C, 247-261

Abstract: This paper revisits the role of board size and composition in corporate governance, employing a measure of private benefits of control (PBC) as an 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 traditional measures of corporate performance. There is also some evidence that director ownership helps to 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 (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Working Paper: The Structure of Corporate Boards and Private Benefits of Control: Evidence from the Russian Stock Exchange (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:34:y:2014:i:c:p:247-261

DOI: 10.1016/j.irfa.2014.03.008

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