OWNERSHIP CONCENTRATION AND FIRM PERFORMANCE IN RUSSIA: THE CASE OF BLUE CHIPS OF THE STOCK MARKET
Based on panel data from 1995.1997, the paper focusses on the impact of ownership concentration on the performance of Russian non-financial privatised companies that constitute the group of .blue chips. of the country.s stock market. We consider three indicators of company performance
. labour productivity, profitability, and Tobins.s q . and employ instrumental variables technique to correct regression results for endogeneity of ownership. We find that ownership concentration positively affects labour productivity, but has a negative impact on Tobins.s q.
The relationship between ownership concentration and profitability follows a U-shaped pattern with the turning point at 56% concentration. These findings imply that ownership concentration results in higher technical efficiency of enterprises, but the benefits from productivity improvements
do not accrue to all shareholders. This is consistent with the expropriation hypothesis that large owners use their power to extract private benefits of control.