CORPORATE TRANSPARENCY AS AN INVESTOR PROTECTION TOOL: EVIDENCE FROM RUSSIA

The paper looks into the problem of enhancing financial performance and efficiency of business processes of Russian companies through improved corporate transparency For the purpose of empirical analysis of relation between corporate transparency and financial performance, we suggest an original corporate transparency rating (disclosure score) tailored specifically for the Russian market. The rating is comprised of 39 indicators reflecting the degree of information disclosure, relevant for all major stakeholder groups. The transparency index for the Russian listed companies is developed from analysis of the publicly available sources. 39 possible attributes are divided into the following categories: general information about the company, corporate strategy, corporate governance, financial information disclosure, corporate risk management, corporate social policy and investment activities. All attributes are assigned equal weights. Alongside the obtained aggregate index, some other indicators of corporate governance quality are included into the model, such as the board membership and the number of independent directors. Econometric modeling reveals positive relation between the level of corporate transparency and the market-to-book ratio for the publicly traded Russian companies. This suggests that improved corporate transparency can be considered as a value driver, controlling information asymmetry, reducing tunnelling, improving risk perception and thus contributing to the attractiveness of companies for investors in general. However, we are fully aware that for the opaque markets, empirical results are not always consistent and heavily depend on metrics and operationalization of variables as well as employed statistical techniques. (C) 2019 Published by Future Academy www.FutureAcademy.org.UK