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National Research University Higher School of EconomicsStudent ThesesMarket reaction assessment at information about Russian companies dividend payments

Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Galina Berdnikova
Market reaction assessment at information about Russian companies dividend payments
Faculty of Economics
Bachelor’s programme
2014
Bachelor's project includes 6 tables, 12 figures, 2 appendixes, 64 references. Total number of pages – 70.Key words: Dividend payments. Dividend policy. Market capitalization. Russian stock market. Event study. Abnormal return.One of the main issues of corporate finance is the assessment of the impact of financial decisions at a company’s market capitalization. Dividend policy implementation is considered with other processes affecting stock prices. However, there is no attention to this problem in Russia.So, the main purpose of the study is to analyze the impact of cash dividend payments at Russian companies’ stock prices by the Event Study analysis.There are five steps we should take to succeed in our study:1. To explore the theoretical aspects of dividend policy;2. To examine tendencies of the dividend policy in Russia;3. To overview the Event Study methodology;4. To estimate the influence of dividend payments on the Russian companies’ market capitalization5. To define if relevance of the company to the concrete industry influences on its reaction to good news.The objects of the research are announcements about Russian companies’ dividend payments which have been published in electronic database EMIS from January, 1 2009 to January, 1 2014. The subject of the research is the set of the theoretical and practical aspects connected with dividend policy implementation in the Russian Federation.The theoretical significance of the work means that its results allow understanding more fully the essence and features of dividend policy in Russia and in the world. The practical significance means that results can be used by companies to develop a successful dividend policy.The project consists of introduction, three chapters, conclusion, references and appendixes. In the introduction we can find topicality of the research. Also, the purposes, tasks, practical and theoretical importance of the work are defined there. In chapter 1 the basic theoretical concepts of work are considered. Various dividend theories, features of dividend policy of the Russian companies are described. Chapter 2 represents the description of the Event Study which is used to assess the influence of an event on a company’s capitalization. In chapter 3 practical application of a method and the main results of the work are described.It was revealed that the market reaction to announcements of dividend payments is reverse to the type of the news. Increase in dividends influences negatively on stock prices and reduces market capitalization of the company. Reduction of the dividends, on the contrary, increases its cost. Neutral news does not influence on the market.Then reactions of the companies of different sectors of economy were compared. It was received that actions of the companies of metallurgical and fuel and energy branches do not react to announcements of increase in dividends while actions of the companies functioning in chemical branch and extracting minerals (except fuel and energy) extremely negatively perceive "good" news.

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