dunnettreader + article + corporate_finance + russia   1

Bernard S. Black, Reinier Kraakman, Anna Tarassova - Russian Privatization and Corporate Governance: What Went Wrong? :: SSRN - Stanford Law Review, Vol. 52, pp. 1731-1808, 2000
Bernard S. Black, Northwestern School of Law & Kellogg School of Management; European Corporate Governance Institute (ECGI); Reinier Kraakman, Harvard Law School, ECGI; Anna Tarassova, U of Maryland, Center on Institutional Reform and the Informal Sector (IRIS) -- In Russia and elsewhere, proponents of rapid, mass privatization of state-owned enterprises (ourselves among them) hoped that the profit incentives unleashed by privatization would soon revive faltering, centrally planned economies. The revival didn't happen. We offer here some partial explanations. First, rapid mass privatization is likely to lead to massive self-dealing by managers and controlling shareholders unless (implausibly in the initial transition from central planning to markets) a country has a good infrastructure for controlling self-dealing. Russia accelerated the self-dealing process by selling control of its largest enterprises cheaply to crooks, who transferred their skimming talents to the enterprises they acquired, and used their wealth to further corrupt the government and block reforms that might constrain their actions. Second, profit incentives to restructure privatized businesses and create new ones can be swamped by the burden on business imposed by a combination of (among other things) a punitive tax system, official corruption, organized crime, and an unfriendly bureaucracy. Third, while self-dealing will still occur (though perhaps to a lesser extent) if state enterprises aren't privatized, since self-dealing accompanies privatization, it politically discredits privatization as a reform strategy and can undercut longer-term reforms. A principal lesson: developing the institutions to control self-dealing is central to successful privatization of large firms. -- PDF File: 79 -- downloaded pdf to Note
article  SSRN  Russia  privatization  Russian_economy  corporate_governance  corporate_law  corporate_finance  corporate_control  corruption  asset_stripping  downloaded 
july 2015 by dunnettreader

Copy this bookmark:



description:


tags: