| The corporate governance quality and market capitalization of Russian companies: An empirical analysis |
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Аuthors: Irina I. Smotritskaya, Dr. Sc. (Econ.), Head of the Center for Public Administration Studies. Institute of Economics of the Russian Academy of Sciences Nadezhda D. Frolova, Research Associate of the Center for Public Administration Studies. Institute of Economics of the Russian Academy of Sciences Abstract: Market capitalization is one of the main criteria for evaluating the effectiveness of management in publicly traded corporations. In the aggregate of factors affecting the market value, the quality of corporate governance is of special importance. The article assesses the impact of the corporate governance quality on the market capitalization of Russian companies. Agency theory, institutional theory and the concept of corporate governance constitute the methodological basis of the research. The research methods include econometric modeling, which allowed identifying 12 composite factors that characterize the quality of corporate governance, and assessing the impact of individual elements of the corporate governance institute on market capitalization. The study sample includes 75 companies whose shares are traded on the Moscow Stock Exchange; the research timeframe is from 2011 to 2017. The results statistically prove that the factors characterizing the quality of the dividend policy and the corporate social responsibility policy have a significant effect on market capitalization indicators. No significant influence of factors characterizing the quality of information disclosure has been established. We have also rejected the assumption that the performance of administration and control bodies exerted a positive effect on market capitalization of Russian companies. The research findings may be of interest to researchers investigating the institute of corporate governance, as well as to representatives of large companies’ shareholders, and public authorities interested in a comprehensive assessment of the quality of corporate governance to improve the existing institutional environment and the practice of state regulation. Keywords: corporate governance; quality of governance; capitalization; principal component analysis; empirical analysis. |
