Complex state ownership, competition, and firm performance – Russian evidence

Purpose State ownership has been common especially in industries with restricted competition. In Russia, state-controlled firms represent around 41 percent of the market value of all listed firms (Deloitte, 2015). Yet, there is a significant gap in the literature regarding the effects of various forms of government control in listed firms. The purpose of this paper is to fill this gap by exploring the impact of the complexity of state ownership and competition on the performance of Russian listed firms. Design/methodology/approach The sample consists of data for 72 firms (360 firm-years) in the Russian MOEX broad market index during 2011–2015. The complexity of state ownership is captured by studying forms of state control including majority/minority, direct/indirect, federal/regional, mixed structures and golden shares. Findings The authors find significant differences in performance relating to different forms of state ownership. State control is negatively related to firm valuation and the sales/employees ratio. Performance is weakest when state ownership takes the form minority, regional or direct ownership. State control through golden shares typically outperforms other state-controlled firms. The authors find indications of employment prioritization beyond the economical optimum. In addition, the relation between state ownership and profitability becomes positive in sectors where state firms appear to enjoy lower competition. Originality/value While the effects of state ownership have been studied on many markets, there is a lack of studies on the effects of different forms, or the complexity, of state ownership beyond direct and indirect ownership. The authors contribute to the literature on the performance effects of state ownership by studying a multitude of forms of governmental ownership as well as the role of competition in Russia. Especially the profitability of state-controlled firms is significantly affected by industry characteristics. Implications of the results are discussed both from firm and policy maker perspectives.

A ATUAÇÃO DO ESTADO NA ECONOMIA ATRAVÉS DAS CHAMADAS GOLDEN SHARES

RESUMO A separação entre o que seja de cunho público ou privado é constante em nosso cotidiano e para contextos e necessidades distintas, porém, é, sobretudo, utilizada para delimitar direitos e responsabilidades. Deste modo, quando se ouve falar em termos como “empresa”, “companhia”, “ações”, “fusões” e alguns jargões próprios do meio corporativo, é comum que se pense estar diante tão somente de investimentos e contratos estritamente particulares – entretanto, nem sempre é assim. Há tempos – principalmente com o advento da segunda geração de direitos fundamentais - que o Estado se relaciona com os particulares a fim de que os frutos colhidos por ambos, ou seja, a Administração Pública e o cidadão, sejam satisfatórios. Em muitos momentos, órgãos públicos necessitam do particular para que possam alcançar seus fins e vice-versa. [...]

The Alleged Case of Golden Shares in Montenegro: A Candidate Country’s Experience as an Incentive for Including Acta Jure Gestionis within the Range of Restrictions on Free Movement of Capital

The aim of this article is to demonstrate the potential of certain acta jure gestionis to restrict the free movement of capital by way of establishing so-called “golden shares” (i.e., special rights). To that end, a Montenegrin case study is used, since it displays that a privatization contract and the subsequent shareholder’s agreement – typically jure gestionis acts – may be utilized to perpetuate a state’s influence over a privatized company in a manner equally efficient as that of certain jure imperii acts, which were found by the cjeu to represent impermissible restrictions on the free movement of capital. Finally, in view of the Montenegrin case study and the examined case law, arguments are offered and the conclusion is made that the cjeu should essentially adopt the same approach with regard to each of the two types of legal instruments utilized by states to secure their influence over privatized companies.