CORPORATE CONTROL AND GOVERNANCE PRACTICES IN RUSSIA

In Russia, the problem of corporate governance has become a frequent subject fordiscussion. Stories now abound about questionable corporate governance practices, suchas share dilution, asset stripping, transfer pricing, complex ownership structures, limitingshareholders from attending the shareholders meetings. These practices, which havecome to constitute corporate governance abuses to company shareholders, are consideredto be factors adversely affecting the investment climate. At first glance, these nontransparentpractices are a collection of independent cases of managerial malfeasance thatare abusive to investors. However, there seems to be an internal logic in these widelyused practices, as they have been functional for Russian corporates to navigate throughcircumstances characterised by an imperfect formal framework. The aim of this paper isto analyse such functionalities of the practices in light of an evolution of corporateRussia. Taking Yukos Oil Company as a case study, the paper demonstrates that resortingto these practices was instrumental in a process of ensuring corporate survival andstrengthening market position by establishing a coherent corporate entity. This paperemphasises that these practices represent rational and logical responses by economicagents to the prevailing conditions shaped by policy choices, political andmacroeconomic environment, and institutions....