The Vicious Circles of Control: Regional Governments and Insiders in Privatized Russian Enterprisesкнига
Аннотация: No AccessPolicy Research Working Papers21 Jun 2013The Vicious Circles of Control: Regional Governments and Insiders in Privatized Russian EnterprisesAuthors/Editors: Raj Desai and Itzhak GoldbergRaj Desai and Itzhak Goldberghttps://doi.org/10.1596/1813-9450-2287SectionsAboutPDF (0.1 MB) ToolsAdd to favoritesDownload CitationsTrack Citations ShareFacebookTwitterLinked In Abstract:In Russia and other transition economies that have implemented voucher privatization programs, how can one account for the puzzling behavior of insider-managers who, in stripping assets from the very firms they own, appear to be stealing from one pocket to fill the other? How can one account for the puzzling behavior of insider-managers who, in stripping assets from the very firms they own, appear to be stealing from one pocket to fill the other? Desai and Goldberg suggest that such asset-stripping and failure to restructure are the consequences of interactions between insiders (manager-owners) and regional governments in a particular property rights regime. In this regime, the ability to realize value is limited by uncertainty and illiquidity, so managers have little incentive to increase value. As the central institutions that rule Russia have ceded their powers to the regions, regional governments have imposed various distortions on enterprises to protect local employment. Prospective outsider-investors doubt they can acquire the control rights they need for restructuring firms and doubt they can avoid the distortions regional governments impose on the firms in which they might invest. The result: little restructuring and little new investment. And regional governments, knowing the firms' taxable cash flows will have been reduced through cash flow diversion, have responded by collecting revenues in kind. To disentangle these vicious circles of control, Desai and Goldberg propose a pilot for transforming ownership in insider-dominated firms through a system of simultaneous tax-debt-for-equity conversion and resale through competitive auctions. The objective: to show regional governments, by example, that a more sustainable way to protect employment is to give managers incentives to increase enterprises' value by transferring effective control to investors. The proposed mechanism would provide cash benefits to insiders who agree to sell control to outside investors. The increased cash revenue (rather than in-kind or money surrogates) would enable regional governments to finance safety nets for the unemployed and to promote other regional initiatives. This paper - a product of the Private and Financial Sectors Development Unit, Europe and Central Asia Region - is part of a larger effort in the region to address growth, governance, and poverty in the former Soviet Union. The authors may be contacted at [email protected] or [email protected]. Previous bookNext book FiguresreferencesRecommendeddetailsCited bySOE Reform and Privatization in Transition: China in Comparative PerspectiveInternal capital networks as a source of MNC competitive advantage: Evidence from foreign subsidiary capital structure decisionsResearch in International Business and Finance, Vol.22, No.3Factors Influencing Corporate Governance in Postsocialist Companies: An Analytical FrameworkSSRN Electronic JournalTen Years After The Road to a Free Economy: The Author's Self-evaluation of PrivatisationThe Virtues and Weaknesses of Insider ShareholdingJournal of East-West Business, Vol.6, No.4Ten Years After 'The Road to a Free Economy': The Author's Self-EvaluationSSRN Electronic Journal View Published: February 2000 Copyright & Permissions Related Regions Europe and Central Asia Related Countries Russian Federation Related Topics Finance and Financial Sector Development Governance Macroeconomics and Economic Growth Private Sector Development Urban Development KeywordsCASH FLOWSCOMPETITIVE AUCTIONSCONVERSIONCORPORATE GOVERNANCEEQUITYFINANCEILLIQUIDITYINVESTMENTINVESTORSMARKETOUTSIDE INVESTORSPROF PROPERTYPROPERTY RIGHTSREVENUEREVENUESSAFETY NETSTAXTAX DEBTVOUCHER PRIVATIZATION PDF DownloadLoading ...
Год издания: 2000
Авторы: Raj M. Desai, Itzhak Goldberg
Источник: World Bank policy research working paper
Ключевые слова: Economic theories and models, Economic Policies and Impacts, Corporate Taxation and Avoidance
Другие ссылки: World Bank policy research working paper (HTML)
Library Union Catalog of Bavaria, Berlin and Brandenburg (B3Kat Repository) (PDF)
Library Union Catalog of Bavaria, Berlin and Brandenburg (B3Kat Repository) (HTML)
Library Union Catalog of Bavaria, Berlin and Brandenburg (B3Kat Repository) (PDF)
Library Union Catalog of Bavaria, Berlin and Brandenburg (B3Kat Repository) (HTML)
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