Dividend policy of Russian companies with state participation: Influence of the board of directors

Abstract

The paper aims to explore the characteristics of the dividend policy of Russian companies with state participation and identify its determining factors. Dividend decisions made by the company are largely dependent on the activities of the board of directors, the central corporate governance body, and the liaison between shareholders and managers. The topic is relevant due to the predominant share of companies with state participation in Russia’s GDP. This explains the need to study the trends in their behavior in the field of the dividend policy. In addition, during the period from 2015 to 2017, a number of legislative changes were introduced, including an increase in the rate of dividend payments. Despite this legislative requirement, the established rate is not always observed in practice. This suggests that the board of directors may influence the dividends paid by the company even if there is a statute which regulates dividend payments. The study comprises an empirical analysis of the relationship between structural characteristics of the boards of directors, financial and economic indicators of the companies with state participation, and the dividend payout ratio. The paper analyzes activities of 120 Russian joint-stock companies over a period of three years, from 2015 to 2017. The main hypotheses of the study concerning the relationship between the characteristics of the company boards of directors with government participation and the dividend payout ratio were partially confirmed. A statistically significant relationship was found between some characteristics (the size of the board of directors, the share of women and the share of independent directors who sit on the board) and the dividend payout ratio. At the same time, it is difficult to draw unambiguous conclusions regarding a causal relationship, that is, to talk about the effect of the characteristics of the boards of directors on the propensity of state-owned companies to pay dividends. Also, the dividend policy of the companies with state participation is a source of budget revenue, which further emphasizes the relevance of the proposed study. It should be noted that the results obtained cannot be extended to the entire set of companies on the Russian market.