Who is Monitoring the Monitor? the Influence of Ownership Networks and Organizational Transparency on Long-term Resource Commitment in Russian Listed Firms
Abstract: This empirical study examines the effects of ownership networks and organizational transparency on the long-term resource commitments of large Russian firms. Building on resource dependence and agency theories, we argue that ownership networks may compensate for lack of institutional structures in emerging economies and provide the necessary resources or accountability to enable firm growth through long-term commitments of capital. We use a unique panel dataset of Russian listed firms complemented by information on firms’ transparency and disclosure (TD) practices, major owners, and membership in a leading industry association. These data allow us to analyse the network of ownership and association ties to Russian oligarchs and to the state. We find that a firm’s position in an ownership network and its corporate governance practices in terms of transparency and disclosure are positively associated with long-term investment. We find also that ownership network position and transparency practices significantly interact: firms in peripheral network positions tend to benefit more from improvements to their TD practices. However, this interaction depends on the type of ownership. To analyse this further, we compare different types of network ties: single or multiple controlling owners, state, conglomerate and industry association ties allow us to distinguish the types of resources or oversight that might be available through the network. We find that firms with a single controlling oligarch owner, conglomerate owner, or industry association tie benefit particularly from transparency practices in committing to long-term investment. We interpret these findings through reference to resource dependence and agency theories.
