Corporate Governance in Russia: Concept and Reality

The national system of corporate governance as reflected in the norms and provisions required to raise external finance is a key component of the institutional set-up in any market economy. Such systems may have different configurations but they have one crucial commonality: the task of providing means that help to institutionalize, i.e., regulate according to certain established rules, economic conflict between investors in companies and managers, facilitate information flows, and procure a solid and cost-efficient foundation for the growth of publicly held corporations. In other words, corporate governance is responsible for reassuring individual investors that the money they invest in a public company will be handled with due care by the management of the company, so that the interests of investors are protected. Seen in this perspective, corporate governance presents itself as one of the fundamental institutes of modern Western democracy, acting as a guarantor of sustainable economic growth (Sullivan, 2002). In countries with a long-lasting tradition of private corporate management, reliable and functional corporate governance is taken pretty much for granted, which is obvious from the degree of public outrage and concern when the system misfires, as the cases of ENRON and Parmalat vividly illustrate.