Abstract
The international corporate governance best practices (CGBP) built up over the last decades present all-embracing set of recommendations covering all aspects of companies’ corporate governance practices. Based on experience of publicly traded companies, CGBP recommendations are posed, in fact, as universal goal for all companies. Most of corporate governance rating, scoring and evaluation methods presume that the more CGBP recommendations are installed in a company the higher level of corporate governance practice it has. Lack of some components prescribed by CGBP recommendations or their more simple forms as compared with elaborated recommendations are considered as shortcomings to be corrected. In our view, PhICS model of corporate governance provides more effective and reasonable basis for improving corporate governance practices of most companies (primarily non-public). PhICS model is an evolving set of CGBP recommendations whose selection for a particular company is determined by key development factors whose specific combination usually stays relevant for this for the period of 3–5 years or even longer. These key development factors are: phase (stage) of corporate life cycle (Ph); predominant forms of investments (I) company primarily relies on; level of control the company’s major owners want to have over the company, a leader style they exercise and their vision of company in their personal investment strategy (C); the company’s strategy (S). Relevant model of corporate governance practice for a particular company (PhICS model) is a specific set of CGBP recommendations whose selection is determined by the above factors. Although PhICS model looks “imperfect” as compared to the “ideal corporate governance” model, in terms of the number of recommendations and degree of their elaboration, it provides more effective framework for successful and sustainable company development for a certain period of its; life cycle. Yet, it is important for each company’s owners to timely readjust specific parameters of its PhICS model to significant changes in key development factors. It is only at a very advanced stage of its development and life cycle the company’s corporate governance model may take on many or even most of CGBP recommendations.
This article is based on years-long reflections of the authors as they studied how standards of corporate governance were being embedded in the Russian companies, and after they consulted with many large and midsized Russian companies about evaluation and synthesis of their corporate governance frameworks. It also relies on the authors’ personal experience in the boards of Russian companies
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
See, for example, OECD Principles of Corporate Governance. 2005; Report of the High-level Group of Company Law-Experts on a Modern Regulatory Framework for Company Law in Europe, 2002; Report of the High-level Group of Company Law-Experts on Issued Related to Takeover Bids, 2002; Combined Code on Corporate Governance 2003; Review of the role and effectiveness of non-executive directors. Derek Higgs, January 2003; Combined Code Guidance: report and proposed guidance by an FCR-appointed group chaired by Sir Robert Smith, 2003; Modernizing Company Law and Enhancing Corporate Governance in the European Union: a Plan to Move Forward, 2003;
- 2.
See: Standard and Poor’s Corporate Governance Scores. Criteria, Methodology and Definitions. July 2002; Standard and Poor’s Governance Services Launches New GAMMA Score. Press release, April 2008; Marathon takes crown in Energy Intelligence Governance survey. – International Oil Daily. January 15 2004; Jane Kim. Free web-link offers corporate-governance scores. – Wall Street Journal. May 10, 2005
- 3.
See, for instance: Andrei Vernikov. Does corporate governance really predict firms’ market values in emerging markets? The case of Russian banks. – SSRN Working Papers Series, No 2274282. July 2013; Wei-Xuan Li, Clara Chia Sheng-Chen, Joseph J. French. The relationship between liquidity, corporate governance and firm valuation; evidence from Russia. – Emerging Markets Review 13 (2012);. Corporate Governance in Russia: An Investor Perspective. The Institute of International Finance, 2004; Entrepreneurial Ethics and Corporate Governance in Russia: Interviews with Western Executives Working in Russia. Expert Publication. Moscow 2004; Pajuste A. Do Good Governance Provisions Shelter Investors from Contagion? Evidence from the Russian Crisis. – Beyond Transition. October/November/December 2004, vo. 15, No 1; Guriev S. Lazareva O. Rachinsky A. Tsukhlo S. Corporate Governance in Russian Industry. Moscow 2003; Black B. The Corporate Governance Behavior and Market Valuation of Russian Firms. – Emerging Markets Review, 2001, vol. 2.
- 4.
Martin Lipton. Some thoughts for board of directors in 2013. http://blogs.law.harvard.edu/corpgov/2012/12/31/some-thoughts-for-boards-of-directors-in-2013/
- 5.
We assume that all companies unconditionally comply with all corporate governance requirements that are described in applicable laws and regulations.
- 6.
Ichak K. Adizes. Corporate Life Cycles. Prentice Hall Press. 1990.
- 7.
- 8.
Vedomosti. 16.02.2010.
- 9.
McKinsey. Effective Russia. April 2009.
References
Adizes, I. (1990). Corporate life cycles. How and why corporations grow and die and what to do about it. Prentice Hall Press, 283 p.
Adizes, I. (2004a). Leading the leaders. The Adizes Institute Publishing, 311 p.
Adizes, I. (2004b). Managemment/mismanagement styles. How to identify a style and what to do about it. The Adizes Institute Publishing, 233 p.
Audit Committees Combined Code Guidance. (2003) A report and proposed guidance by an FRC-appointed group chaired by Sir Robert Smith. Submitted to the Financial Reporting Council in December 2002 and published in January 2003, 48 p.
Black, B. (2001). The corporate governance behavior and market valuation of Russian firms. Emerging Markets Review, 2, 89–108.
Burns, J. (1975). Leadership. Harper Torchbooks, 532 p.
Combined Code on Corporate Governance. (2003, July). 82 p.
Corporate Governance in Russia: An Investor Perspective. (2004). The Institute of International Finance, 26 p.
Entrepreneurial Ethics and Corporate Governance in Russia: Interviews with Western Executives Working in Russia. (2004). Moscow: Expert Publication, 27 p.
Guriev, S., Lazareva, O., Rachinsky, A., Tsukhlo, S. (2003). Corporate governance in Russian industry. Moscow, 57 p.
Jane, K. (2005). Free web-link offers corporate-governance scores. Wall Street Journal. 10 May 2005.
Marathon takes crown in Energy Intelligence Governance survey. International oil daily. 15 Jan 2004.
Martin, L. Some thoughts for board of directors in 2013. http://blogs.law.harvard.edu/corpgov/2012/12/31/some-thoughts-for-boards-of-directors-in-2013. 10 Apr 2013.
McKinsey. (2009, April). Effective Russia. 11 p.
Modernizing Company Law and Enhancing Corporate Governance in the European Union: a Plan to Move Forward. Brussels, 21 May 2003, 29 p.
OECD Principles of Corporate Governance. (2005). 40 p.
Pajuste, A. (2004, October/November/December). Do good governance provisions shelter investors from contagion? Evidence from the Russian crisis. Beyond transition, 15(1), 10–11.
Report of the High-level Group of Company Law-Experts on a Modern Regulatory Framework for Company Law in Europe. Brussels, 4 Nov 2002, 161 p.
Report of the High-level Group of Company Law-Experts on Issued Related to Takeover Bids. Brussels, 10 Jan 2002, 96 p.
Review of the role and effectiveness of non-executive directors. Derek Higgs, Jan 2003, 120 p.
Standard & Poor’s Corporate Governance Scores. Criteria, Methodology and Definitions. July 2002, 16 p.
Standard & Poor’s Governance Services Launches New GAMMA Score. Press release, Apr 2008, 10 p.
Wei-Xuan, L., Clara Chia, S.-C., & French, J. J. (2012). The relationship between liquidity, corporate governance and firm valuation; Evidence from Russia. Emergin Markets Review, 13, 465–477.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2014 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Belikov, I., Verbitsky, V., Nikitchanova, E. (2014). Guidance for Practical Corporate Governance: PhICS Model. In: Boubaker, S., Nguyen, D. (eds) Corporate Governance in Emerging Markets. CSR, Sustainability, Ethics & Governance. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-44955-0_25
Download citation
DOI: https://doi.org/10.1007/978-3-642-44955-0_25
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-44954-3
Online ISBN: 978-3-642-44955-0
eBook Packages: Business and EconomicsBusiness and Management (R0)