The loud corporate failures have seriously shaken the public belief in modern corporate system and challenge the arguments of agency theorists. While modern corporate system in the developed economies has been built for centuries, the issues stemming of separation of ownership and control threaten to be-come considerable for post-transitional countries.
This dissertation aims is to assess the effectiveness of corporate governance mechanisms in Kazakhstan. Taking the agency perspective, the assessment is carried out by examining the management turnover – performance relationship in 73 Kazakh firms listed on Kazakhstan Stock Exchange for the period of 2011-2013. The negative association between past performance of firms and management turnover was found significant at borderline line of 5% level, which cannot be interpreted as evidence of strong relationship
Table of Contents
1 Introduction
2 Literature review
2.1 The separation of ownership from control
2.2 The agency theory, market efficiency and management competition
2.3 The role of large shareholders and legal protection
2.4 Empirical research in the Developed and Emerging markets
2.5 Transitional economies
2.6 Summary
2.7 Hypothesis development
3 Methodology
3.1 Research design and data collection
3.2 Variables measurement
3.2.1 CEO turnover
3.2.2 Board size
3.2.3 Independent directors
3.2.4 CEO ownership
3.2.5 Performance measures
3.2.6 Firm size
3.2.7 Firm leverage
3.2.8 Model Specification
3.2.9 Summary
4 Results and Discussion
4.1 Descriptive statistics
4.2 Regression results
4.3 Limitations
5 Conclusions and recommendations
6 Personal learning and development
7 The list of references
8 Appendices
Research Objectives & Topics
The primary objective of this dissertation is to assess the effectiveness of corporate governance mechanisms within Kazakhstan by investigating the relationship between management turnover and firm performance. Using an agency theory perspective, the study analyzes whether poorly performing firms effectively discipline their management through turnover, a common indicator of governance health in developed and emerging economies.
- Assessment of corporate governance effectiveness in post-transitional Kazakhstan.
- Analysis of the management turnover-performance relationship using logit regression.
- Evaluation of internal monitoring mechanisms, including board size and composition.
- Examination of the role of CEO ownership and firm-level financial constraints.
- Empirical study covering 73 publicly traded companies on the Kazakhstan Stock Exchange.
Excerpt from the Book
2.1 The separation of ownership from control
‘The directors of such [joint-stock] companies, however being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which a partners in private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master’s honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.’
The classical divergence of interests between managers and owners has been sharply remarked by Adam Smith in 1776(cited in Jensen and Meckling, 1976). At the beginning of the 20th century this statement has received special topicality in the influential book of Berle and Means (1932). Academics report a large dispersion of stocks among shareholders in the largest US corporations. According to authors, the largest equity holder among 14 major US enterprises in 1929 owned 2.74% of shares from the total number of 23 738 stockholders (Berle and Means, 1932, ch.4). Being so widely diffused, none of the shareholders was able to dominate and had no interest to exercise his power over managers (Berle and Means, 1932, ch.5). Their conclusion is that stock companies in their evolution witnessed “separation of ownership from control”; the shareholder delegated wealth to corporations which have been controlled by the groups of executives (Berle and Means, 1932, ch.1):
Summary of Chapters
1 Introduction: Provides the research background, defines the core problem of agency theory and the separation of ownership and control, and outlines the motivation for studying corporate governance in Kazakhstan.
2 Literature review: Synthesizes foundational agency theories and existing empirical studies from developed and transitional economies regarding managerial disciplining, board characteristics, and ownership structure.
3 Methodology: Details the research design, the selection of the sample of 73 Kazakh firms, the variables used, and the specification of the logit regression model applied to the dataset.
4 Results and Discussion: Presents the empirical findings based on descriptive statistics and regression analysis, discussing the significance of performance and firm characteristics on management turnover.
5 Conclusions and recommendations: Summarizes the study’s findings on governance effectiveness in Kazakhstan and offers suggestions for future research, including a broader analysis of ownership structures.
6 Personal learning and development: Reflects on the author's experience with independent research, data collection challenges, and the acquisition of new analytical skills during the dissertation process.
7 The list of references: Provides a comprehensive bibliography of academic and professional sources cited in the study.
8 Appendices: Contains detailed tables of descriptive statistics and the technical Stata Do-file commands used for the data analysis.
Keywords
Corporate governance, Agency theory, Kazakhstan, Management turnover, Firm performance, Logit regression, Board size, Independent directors, CEO ownership, Transitional economies, Monitoring mechanisms, Stock exchange, Corporate accountability, Financial constraints, Ownership structure.
Frequently Asked Questions
What is the core subject of this research?
The dissertation focuses on the effectiveness of corporate governance in the Republic of Kazakhstan, specifically analyzing whether governance mechanisms are successful in disciplining managers in poorly performing firms.
What are the primary thematic fields covered?
The study covers corporate governance frameworks, agency theory, managerial disciplining, the impact of board structure, and ownership dynamics in a post-transitional economic context.
What is the specific research goal?
The goal is to test the hypothesis that the likelihood of management turnover in Kazakh firms is negatively related to firm performance, thereby indicating the presence of effective monitoring.
Which scientific methods are applied?
The researcher employs a positivist approach using a logit regression model to analyze panel data collected from 73 companies listed on the Kazakhstan Stock Exchange between 2010 and 2013.
What does the main body of the work address?
It provides a theoretical framework for agency problems, a review of empirical research in various global markets, detailed methodology, and an analysis of the regression results relative to the Kazakh market.
Which keywords characterize this work?
Key terms include Corporate Governance, Agency Theory, Kazakhstan, Management Turnover, Firm Performance, Logit Regression, and Monitoring Mechanisms.
How does the author define the relationship between CEO turnover and performance?
The research finds a negative association between past firm performance and management turnover, significant at the 5% level, suggesting some evidence of disciplining, although the relationship is not characterized as strong.
Why were 49 companies excluded from the initial KASE list?
These companies were excluded because they did not trade stocks but instead dealt in debt securities, which falls outside the scope of this research on open stock corporations.
What were the main constraints identified in the research?
Limitations included the inability to distinguish between forced and voluntary management changes, data unavailability for certain years, and the lack of comprehensive corporate disclosure databases in Kazakhstan.
- Quote paper
- Nurken Buralkiyev (Author), 2013, Is corporate governance effective in Kazakhstan?, Munich, GRIN Verlag, https://www.grin.com/document/432232
