The Influence of Foreign Directors on Russian Companies' Performance

The purpose of this study was to determine foreign directors’ influence on Russian companies performance – an analysis of direct and moderating effects. Based on the panel data of 85 largest Russian companies by capitalization of 2009 – 2014, a fixed effects model was used with ROA and Q-Tobin as dependent variables. The regression analysis’ results demonstrated the negative significant influence of foreign directors on companies’ performance when the return on assets (ROA) was used as a dependent variable. While the Q-Tobin model revealed a positive, but an insignificant influence of a key variable on a dependent one. It may be suggested that foreign directors adversely affect the short-term companies’ outcomes due to the high foreign directors remunerating costs, additional costs associated with their presence, as well as unreasonable decisions made by foreigners in the short-term horizon due to not enough Russian market peculiarities’ knowledge. From the other standpoint, the positive direction of foreign directors’ influence in the case of the Q-Tobin model illustrates the potential contribution of foreign directors' expert knowledge in matters foreign market operations matters to the company’s performance, especially when there are operations abroad.