Stakeholders, Governance, and the Russian Enterprise Dilemma

Introduction
Russia problem (economy):
first, the continuing lack of investment and restructuring in the corporate sector
is the “virtual” economy
What happens when manager are owners
àNo external monitoring
àNot limited to protecting minority shareholder or other financiers
owners-managers have to restructure firm and maximize their value over the long run
maximizing value is a reasonable long-term objective only if that value can be realized through the sale of the ownership right in enterprises
because dividend are taxable and have to shared with other stockholder, mainly employees, owners have been more inclined to withdraw cash from their enterprises by requesting reimbursement for fictitious expenses or engaging in other types of theft
Regional government exert influence
àregional governments àceded their power to : regions, regional admnstration
à taxable revenues of firm will have been reduced by cash-flow diversion
Barter and arrears as tools of control
“improved Russian bankruptcy procedures put in pace since 1998 have greatly facilitated the reorganization of insolvent companies”