Economics Education and Research Consortium - Russia OWNERSHIP STRUCTURE AND FIRM PERFORMANCE IN RUSSIA (A CASE OF BLUE CHIPS)

Based on panel data from 1995-1997, the research focuses on the impact of ownership structure on the performance of Russian non-financial privatized companies that constitute the group of blue chips of the country’s stock market. Several performance indicators are used: Tobin’s Q, labour productivity and profitability. In particular, the paper analyzes the relationship between company performance on the one hand and concentration of ownership and the identity of different groups of investors on the other. The results of the study show that the impact of ownership structures on performance of the sampled companies is not clear-cut, especially with respect to the stakes of different groups of owners. The main finding is obtained with the help of instrumental variable technique. It shows that concentration of ownership in the hands of private owners improves firm performance. However, at some point concentration starts to render a negative impact. This can be interpreted as an evidence of costs associated with ownership concentration. MOSCOW – ST.PETERSBURG May 2000 ∗ Russian-European Centre for Economic Policy (RECEP) and Working Centre for Economic Reforms under the Government of the Russian Federation, Moscow ∗∗ School of Management, St. Petersburg State University, St. Petersburg The authors acknowledge financial and professional support from Economics Education and Research Consortium – Russia (Eurasia Foundation research grant # 98-219). The Consortium is financed by US AID and other private and public sources.