Shareholder Democracy under Autocracy: Voting Rights and Corporate Performance in Imperial Russia

Amanda Gregg (Middlebury College), Steven Nafziger (Williams College), Amy Dayton (Harvard University)

This paper investigates how the rules that corporations wrote for themselves related to corporate finance and performance in an environment characterized by poor investor protections, Imperial Russia. We compose a new database of detailed governance provisions from Imperial Russian corporate charters, which we connect to a comprehensive panel database of corporate balance sheets from 1900 to 1915. We document how differences in votes per share and other shareholder rights provisions related to how corporations chose to finance operations using debt vs. equity and whether these governance provisions related systematically to corporate performance on the balance sheet and in terms of the market-to-book ratio. This investigation reveals the tradeoffs weighed by Imperial Russian corporations and demonstrates the surprising flexibility that Russian corporations enjoyed, conditional on obtaining a corporate charter.