Corporate governance as political insurance: firm-level institutional creation in emerging markets and beyond

What do we know about the politics of corporate governance in emerging markets? Although the state-level institutions have been amply explored, firmlevel dynamics remain under-theorized. Complementing the orthodox emphasis on external finance as causal force behind the adoption of ‘minority shareholder protections’, the article outlines an alternative mechanism for firms operating in political settings with heightened risk of state intrusion. The Anglo-Saxon governance institutions can serve domestic managers as a strategy to build alliances with foreign stakeholders so as to counteract a dirigiste government. Empirically, the author seeks to explain the implementation of internationally accepted standards of corporate governance by Russia’s big business between 1999 and 2004. The project disaggregates ‘corporate governance’ into specific institutions and examines their quality at the firm level. The causal inference links the shift in state policy vis-à-vis corporate property to the improved treatment of minority owners by the company insiders.