Case ID: 703010     Solution ID: 32173     Words: 1467 Price $ 45

Hermitage Fund Media and Corporate Governance in Russia Case Solution

Abstract

After the privatization and credit for share plots by the Russian government, administrators and oligarchs gained control and improved themselves. Russia did not have successful administration organizations, and there exists a requirement for powerful bookkeeping guidelines and controls and authorization of these laws by the administrative specialists. Withdrawal Fund in Russia utilized a successful procedure of contributing by concentrating on underestimated organizations with corporate administration issues. Utilizing an activism technique, it constrained the administration's miss-administration and henceforth stock costs expanded. Such activism was reacted by the dynamic reactions through the press and claims. In any case, it emphatically influenced the administration choices. Stock costs expanded, and it profited the financial specialists. New laws were presented which profited the organizations and the nation all in all.

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Questions Covered

1. What are the various ways in which managers in Russia extract value out of their companies disproportionate to their equity stakes? Which of these methods seem to be peculiar to the Russian environment?

2. What institutions and mechanisms are normally important in decisions by insiders to divert resources and which of these are ineffective in Russia?

3. What is Browder’s strategy? How does this differ from traditional investing? Do you agree with Browder’s contention that media attention limit corporate governance abuses (in Russia, elsewhere)? How does the medium affect governance decisions?

4. As an investor in the Hermitage Fund, what would you advise Bill Browder do in Summer 2002?

5. What stands in the way of shareholder activism of this type more generally for investment funds? Is such activism good for fund investors? Is it good for the country?