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Financing industrial corporations in a developing economy: panel evidence from Imperial Russia

Published online by Cambridge University Press:  15 March 2023

Amanda Gregg Open the ORCID record for Amanda Gregg [Opens in a new window]  and
Steven Nafziger Open the ORCID record for Steven Nafziger [Opens in a new window]
Amanda Gregg*
Affiliation:
Middlebury College
Steven Nafziger*
Affiliation:
Williams College
*
Amanda Gregg (corresponding author), Middlebury College, Warner Hall 316, 303 College St., Middlebury, VT 05753, USA, email: [email protected]
Steven Nafziger, Department of Economics, Williams College, Schapiro Hall, 24 Hopkins Hall Drive, Williamstown, MA 01267, USA, email: [email protected].
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Abstract

This article explores the financing of early industrial corporations using newly constructed panel data from Imperial Russian balance sheets. We document how corporate capital structures and dividend payout policies reflected internal agency issues, information asymmetries with external investors, life cycle considerations, and other frictions present in the Russian context. In particular, we find that widely held, listed and more profitable corporations were less reliant on debt financing. Asset tangibility was associated with lower debt levels, suggesting that Russian corporate debt was short-term, collateral was largely irrelevant, or agency problems dominated. Finally, we find that many of these same issues, for example ownership structure and access to securities markets, also mattered for financial performance and that dividends may have compensated investors for poor legal protections.

Keywords

corporate financefinancial historyindustrializationRussiaRussian Empire

JEL classification

G32: Financing Policy • Financial Risk and Risk Management • Capital and Ownership Structure • Value of Firms • Goodwill N63: Europe: Pre-1913 N23: Europe: Pre-1913
Type
Article
Information
Financial History Review , Volume 30 , Issue 2 , August 2023 , pp. 125 - 161
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Copyright
Copyright © The Author(s), 2023. Published by Cambridge University Press on behalf of the European Association for Banking and Financial History

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Footnotes

We thank the editor and two anonymous referees for their care and attention in reviewing our work. We are also grateful to colleagues at Middlebury, Williams and Yale and to seminar participants at Colby, Harvard, Yale, the University of Connecticut, Caltech, the Washington Area Economic History Seminar, the Bank of Finland and the World Congress of Business History in Bergen, Norway, for helpful comments. Peter Davis, Tamar Matiashvili, Madeline McFarland, Thomas Rahr, Sanket Vadlamani and Brenda Xu provided exemplary research assistance. We greatly appreciate the aid with sources provided by librarians at Harvard, the University of Illinois and the National Library of Finland. Financial support was provided by Middlebury College, Williams College, the Bank of Finland Institute for Economies in Transition and the National Science Foundation (SES #s 1658877 and 1658887).

References

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