Whither Corporate Russia?

Using firm-level information obtained from the Russian Trading System stock exchange from 1998 through 2006, we estimate growth performance of the Russian corporate sector. We find consistently improving growth, and note that higher growth performance is correlated with greater partial state re-acquisition and state corporate governance presence. We argue that the latter served, not only to safeguard against misappropriation of firm assets and government subsidies, but also to discourage managers from opting for shorter than optimal investment durations. Thus state corporate-governance strategy may serve as a second best policy to a more developed property rights system.