Mitigating Financing Constraints on Investment: Ownership and Transparency in Russia

Abstract

This study examines the impact of transparency and disclosure scores on fixed investment within the unique context of the Russian capital market. I find that transparency has a positive and significant impact on fixed investment. However, state-owned enterprises are more sensitive than oligarch-owned enterprises to improved transparency. I find robust evidence that greater transparency of financially constrained firms positively affects investment. Transparency, therefore, is a valid mechanism for reducing financing constraints on investment.