Corporate governance in the extractive industry-comparing russian oil and gas companies and south african gold producers

Abstract

The influence of local culture on the way business is conducted has been recognized by a whole array of literature (e.g. Hofstede, 2001).Due to the focus on the financial industry throughout the last several years, other vital sectors such as the extractive industry have been neglected by academic research. This is even more surprising given the fact that the extractive industry is a particularly exciting subject of study.Its main capital is mining rights to explore and exploit the natural resources in a specific geographic area. Once a corporation decides to start exploitation, the venture is most likely to employ lots of workers from the communities around the plant. This unavoidably entangles the companies closely with local and national politics. This paper inquires into the reporting of corporate governance in the extractive industry. For the purpose of this study, four Russian companies in the Oil and Gas sector and four South African gold producers were chosen. Despite obvious differences in the mining process, both sectors are vital to the economies of both nations and both are under strong influence of regulations and politics. Both groups report about their corporate governance on a very high level. The paper concludes that the notion of closed and opaque Russian companies does not hold any longer.