Financing nascent industry : Leverage, politics, and performance in Imperial Russia

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Titel: Financing nascent industry : Leverage, politics, and performance in Imperial Russia
Författare: Gregg, Amanda ; Nafziger, Steven
Institution: Bank of Finland
Avdelning / Enhet: Institute for Economies in Transition (BOFIT)
Serie: BOFIT Discussion Papers
Serienumber: 7/2020
Utgivningsår: 2020
Utgivningsdatum: 8.3.2020
Sidor: 51
Subject (yso): rahoitus; yritykset; taloushistoria; teollistuminen
Nyckelord: Bofit-kokoelma; Venäjä
JEL: N23; N63; G32
Andra nyckelord: corporate finance; financial history; industrialization; Russia; Russian empire
Abstrakt: This paper explores the dynamics of corporate finance during the early stages of industrial growth by examining a newly constructed panel database of Imperial Russian industrial corporations’ balance sheets. We document large differences in financial strategies and outcomes across industries, over time, over firms’ life cycles, and between two Russian corporation types. Russian corporations’ profits and dividend payouts followed the Russian business cycle. Russian corporate debt ratios mostly follow modern capital structure theories, but tangible assets were not associated with higher debt levels, suggesting that Russian corporate debt was short-term, that collateral was irrelevant, or that agency problems dominated. We also find evidence that investors needed to be compensated for poor protections, since dividends were valued and widely-held corporations enjoyed greater returns. While the evidence suggests the presence of these and other frictions, our findings are consistent with the Imperial Russian financial system functioning well enough to enable early industrial development.

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