Effects of Top Management Replacement on Firms' Behavior in Transition Russian Economy

Victoria Krivogorsky
Morgan State University

John W. Eichenseher
University of Wisconsin–Madison

Abstract: Effects of Top Management Replacement on Firms’ Behavior in Transition Russian Economy

Abstract. The key to further economic reform in Russia now rests primarily in the response of individual managers to the created institutional infrastructure. Unless these individuals become active agents in the reform process, the Russian economy is likely to remain frozen in partial transition. In this context, this paper reports on an empirical study of the decision-making process rooted in the highly uncertain political and social environment, exploring the relationship between changes in top enterprise management and subsequent managerial decisions. Empirical test results based on 270 sample Russian enterprises provide strong evidence for differential managerial decisions by new top managers such as greater willingness to develop long-term plans and to enter into new business ventures, while retaining mechanisms such as employee stock redemptions to ensure their control over enterprise decision-making. Such results provide hope for the evolution of new management techniques there– including the evolution of accounting information systems suitable for a market-based economy.

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