Ownership Structure and Firm Performance in Russia: the Case of Blue Chips of the Stock Market

Abstract

Based on panel data for 1995-1997, the article examines the impact of the share capital structure on the performance of non-financial privatized enterprises in Russia that are part of the blue-chip group of the stock market. Two main questions are considered: how does the concentration of ownership affect the performance of enterprises and what is the role of different groups of owners in corporate governance.  Three indicators are used to measure firm performance: labor productivity, profitability, and Tobin Q. The study shows that the impact of ownership concentration on the performance of companies in the sample is ambiguous. In particular, there is no evidence that the concentration of ownership affects such an indicator of the efficiency of enterprises as labor productivity. The analysis of profitability and capitalization of companies allows us to raise a number of important questions about the distribution of profits among shareholders. The results show that the costs of property concentration exceed the benefits associated with it. This means that the concentration of ownership involves significant expropriation of small shareholders. Analysis of individual groups of owners shows that the presence of foreign shareholders improves the performance of enterprises, as measured by labor productivity and Tobin's Q.