The impact of corporate culture on the bankruptcy of Russian enterprises on the basis of the method of Partial Least Squares Path Modeling

Abstract

Elena Anatolievna Fedorova - Financial University at the Government of the Russian Federation.

E-mail: ecolena@mail.ru

Yury Alexandrovich Zelenkov - Financial University at the Government of the Russian Federation.

E-mail: yuri.zelenkov@gmail.com

Dmitry Vasilievich Chekrizov - Central Bank of the Russian Federation.

E-mail: chekrizovdv@mail.ru

Polina Sergeevna Dobryanskaya - Volkswagen Group Rus LLC.
Email: Dobryanskaya.p@gmail.com

The aim of this study was to identify the most important factors of external and internal environment (which includes financial performance and corporate governance quality) to predict bankruptcy of Russian enterprises. Parameters (sometimes also called latent variables) "external environment", "corporate governance" and "financial status" cannot be measured directly because they are not clearly defined. In this case, it is usually measured using indicators that are associated with latent variables by linear relationships. The form of these dependencies can be determined on the basis of the method PLS-PM (Partial Least Squares - Path Modeling). Empirical base of research consisted of 376 public Russian companies. On the basis of the analysis it was found that the greatest impact on the probability of bankruptcy is having external environment (MICEX; RTS; the price of Brent crude). Also revealed the influence of financial-economic factors on the probability of bankruptcy. Corporate governance less affected by the two previous latent variables, but its effect is also very significant: the risk of bankruptcy increases with an increase in the frequency of change of the General Director; the decrease in the proportion of men in the Board of Directors; increase the number of members of the Board of Directors.