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Recent Developments in Corporate Governance

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Accounting and Financial System Reform in a Transition Economy: A Case Study of Russia

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Abstract

Corporate governance is a new and rapidly changing field in transition economies. Companies must have good corporate governance to attract foreign investment but many Russian firms have governance practices that leave much to be desired. Until a few years ago, transparency was practically unknown and even now many enterprises hide important financial information rather than report it. Minority shareholders often had little or no rights and the value of their investments evaporated as top management plundered the corporation and transferred assets to shell corporations they controlled.

After the Russian default in 1998 several private organizations were formed to protect minority shareholders and to pressure Russian corporations to adopt good corporate governance practices such as electing independent directors, forming an audit committee as part of the board of directors and adopting and implementing international financial reporting standards. This paper reports on their efforts and discusses how far along Russian corporations are on the road to good corporate governance practices. Some of the information in this paper was gathered from interviews conducted in Moscow and St. Petersburg during the summer of 2003.

An earlier version of this chapter was presented at the International Academy of Business and Public Administration Disciplines (IABPAD), Annual Conference, New Orleans, January 23–25, 2004.

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(2005). Recent Developments in Corporate Governance. In: Accounting and Financial System Reform in a Transition Economy: A Case Study of Russia. Springer, Boston, MA. https://doi.org/10.1007/0-387-23887-5_4

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