Endogenous board formation and its determinants in a transition economy: evidence from Russia *

Abstract

Using a unique dataset of joint-stock companies in Russia, we studied the endogenous formation of corporate boards and its determinants. The findings reported in this paper strongly suggest that the theories and empirical methods of financial and organizational economics help accurately pinpoint the determinants of board size, proportion of outsider directors, and outsideness of chairman appointment of Russian firms. We also found that their board structure can be reasonably explained by the bargaining hypothesis. Furthermore, our empirical evidence demonstrated that Russia’s legal system and peculiarities as a transition economy also have a great deal of influence in determining board formation.