The Influence of Government Intervention on Corporate Investment Decisions: Evidence from Russia

Student: Bulamu Erik

Educational Programme: Financial Markets and Financial Institutions (Master)

Year of Graduation: 2018

This study examines the impact of government integration and firm’s investment efficiency and level through financial constraints of the firm. The results provide support to debt overhang problem of Russian firms based on the sample of 177 Russian publicly traded firms for the period between 2010 and 2016. Moreover, state-owned firms face this problem at a lesser degree than others because of financial support provided by the Russian state. However, the hypothesis about the overinvestments of politically connected firms was not proven, meaning that these firms managed effectively as private firms. Also, it was shown that firms are more dependent on investment opportunities and tangibility of assets than on real factors, like cash flow and financial leverage.

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