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Effects of People's IPO on the Russian Financial Market and Corporate Governance Praxis

Effects of People's IPO on the Russian Financial Market and Corporate Governance Praxis
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Author(s): Dmitry Shevchenko (Southern Federal University, Russia) and Parmenas Kimani Njoroge (Southern Federal University, Russia)
Copyright: 2020
Pages: 19
Source title: Corporate Governance Models and Applications in Developing Economies
Source Author(s)/Editor(s): Otuo Serebour Agyemang (University of Cape Coast, Ghana), Abraham Ansong (University of Cape Coast, Ghana) and Ben Kwame Agyei-Mensah (Solbridge International School of Business, South Korea)
DOI: 10.4018/978-1-5225-9607-3.ch005

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Abstract

People's IPO is a project that aims at distribution shares of state-owned entities to members of the public. Three Russian state-owned enterprises, VTB, SBERBANK, and ROSNEFT, conducted People's IPO between 2006 and 2007. The aim of these IPOs was to offer the general public an opportunity to own shares in state-owned enterprises. Such an investment opportunity would give ordinary citizens a stake in Russia's biggest state enterprises. Authors investigated the success or otherwise of these IPOs in distributing shares of government enterprises to ordinary citizens and gave recommendations on possible ways of improving public participation in People's IPOs. The aim of this chapter is to propose People's IPO as one of the ways of ensuring proper wealth distribution and eradicating injustice in the financial system. Authors recommend adoption of offer prices that friendly to small investors, creation of credit lines that would avail funds for investing in the IPOs. Companies going public should also adherer to the world's best to ensure growth in shareholders wealth.

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