| Summary: | During the 1990s businesses in Russia routinely relied on practices not entirely compatible with the formal rules. In the area of corporate governance, such extra-legal or informal practices as share dilution, asset stripping, transfer pricing, limiting shareholders' access to votes, and using bankruptcy as a takeover instrument reportedly became pervasive in the running of joint-stock companies. This study aims at identifying the operational specifics of these informal corporate governance practices (ICGPs) and understanding their unique nature and role in post-Soviet Russia. Through the case studies of the Yukos Oil Company, Siberian (Russian) Aluminium, and Norilsk Nickel, this thesis presents an analysis of how ICGPs worked, why they were used, and what kinds of functions they performed in the context of the post-Communist transformation. This thesis demonstrates the ambiguity of ICGPs. ICGPs were destructive in the sense that they undermined the foundations of good corporate governance, and their use constrained improvement to Russia's investment climate. They were widely acknowledged as corporate governance abuses by investors, policymakers, and scholars as they violated shareholders' rights, the protection of which is a cornerstone of globally accepted standards of good corporate governance. However, it is important to recognise that they also played a constructive role in the context of the disintegration of the Soviet economic system and of underdeveloped market-supporting institutions. Post-Soviet enterprises, if they were to survive, grow, and compete in a new market-oriented environment, were required to encompass the resources and capabilities necessary to become a coherent business unit. The study demonstrates that ICGPs were constructive in the sense that they aided the reconstitution of post-Soviet enterprises into business firms, able to engage in commercial activities in the market-based economy. They were utilised to address the fundamental tasks of reorganisation that confronted enterprises, namely, establishing administrative control, integrating business functions, and reconstructing the production chain, in the context of the breakdown of the Soviet economic hierarchy and of institutional weaknesses.
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