R. I. Kapelyushnikov, N. V. Demina. Top Management Turnover in Russian Industrial Companies: The Evidence from The Russian Economic Barometer
V.3, N3, 2005
The paper provides new survey evidence of effects of the firm’s performance and ownership profile on management turnover and succession patterns in Russian industrial firms. On the basis of the Russian Economic Barometer panel data authors analyze changes in average tenure of top managers in the REB respondent enterprises over 1990s, estimate probabilities of their replacement and assess shares of incumbents and non-incumbents among CEOs and Chairmen of the Board of Directors. The major econometric findings are that managers’ entrenchment is positively related to insider ownership and negatively to outsider ownership. Besides, a probability to be replaced is higher for poorly performing than for well performing top executives. As for succession patterns, «outside» appointments seem to be more likely in distressed companies and in companies dominated by outsiders while «inside» appointments seem to be more likely in well performed companies and in companies dominated by insiders. The main conclusion following from the study is that in spite of numerous built-in defects, the Russian system of corporate governance is doing what it has to do, helping to select the more competent managers and to enhance effectiveness of their work.