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Does corporate governance reform necessarily boost firm performance? A Quasi-Experimental Analysis

Pal, S and Kuznecovs, M (2013) Does corporate governance reform necessarily boost firm performance? A Quasi-Experimental Analysis . (Unpublished)

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Abstract

While the existing literature suggests that CG reforms tend to boost firm performance, in the context of Russia the present paper argues that the beneficial effect of any CG reform may be outweighed by the possible adverse effects arising from the conflict between the state (as tax collector) and the controlling owner and/or that between the central and local governments in a decentralized set-up. Using introduction of the CG reform as a natural experiment, we compare the estimates of market (e.g., Tobin’s Q) and accounting (e.g., EBIT share) based measures of performance to identify the causal effect of the reform on firm performance in a sample of firm-level panel data from Russia. We argue that the negative effect of the reform is likely to be more pronounced in the accounting based measure of performance which can be subject to manipulation. First, greater Transparency and Disclosure is associated with significantly higher Tobin’s Q, but not EBIT share. Further analysis exploits the variation in both measures of firm performance between domestic and foreign listed Russian firms before and after the introduction of CG reform and suggests that the reforms failed to spur any significant improvement in the market based performance measure, while it is associated with significantly lower EBIT-share among domestic listed Russian firms. We argue that the differential impact of the reform on EBIT share provides support to our central hypothesis.

Item Type: Other
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
AuthorsEmailORCID
Pal, SUNSPECIFIEDUNSPECIFIED
Kuznecovs, MUNSPECIFIEDUNSPECIFIED
Date : 16 April 2013
Uncontrolled Keywords : Corporate governance reform, Transparency and Disclosure rules, Domestic and foreign listed firms, Quasi-experimental analysis
Related URLs :
Depositing User : Symplectic Elements
Date Deposited : 12 Nov 2013 15:50
Last Modified : 12 Nov 2013 15:55
URI: http://epubs.surrey.ac.uk/id/eprint/804118

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