The corporate governance behavior and market value of Russian firms

Bernard Black*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

191 Scopus citations


I examine the relationship between corporate governance behavior and market value for a sample of 21 Russian firms. I use (1) fall 1999 corporate governance rankings for these firms, developed by a Russian investment bank, and (2) the 'value ratio' of actual market capitalization to potential Western market capitalization for these firms, determined independently by a second Russian investment bank. The correlation between ln(value ratio) and governance ranking is striking and statistically strong: Pearson r=0.90 (t=8.97). A worst (51 ranking) to best (7 ranking) governance improvement predicts a 700-fold increase in firm value. These results are tentative because of the small sample, but they suggest that corporate governance behavior has a powerful effect on market value in a country where legal and cultural constraints on corporate behavior are weak.

Original languageEnglish (US)
Pages (from-to)89-108
Number of pages20
JournalEmerging Markets Review
Issue number2
StatePublished - Jun 2001


  • Corporate governance
  • Corporate governance rankings
  • Russia

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics


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