The Impact of Corruption on the Dividend Policy of Firms

In developing countries, including Russia, institutions are imperfect and thus generate various barriers to the firms activities that reduce their profits. One of the main barriers is created through the extension of corruption that, combined with the weak judicial institutions and violations of property rights, affects public services regulating the activities of enterprises. Monetary outflows due to corruption transactions invariably lead to the deformation of companies' financial policies, and, as a result, affect the accrual of dividends formed of free cash flow. The methodology for estimation of the corruption-related nature of the legislation regulating the operating activity of firms is developed, followed by a regression analysis. The main conclusion is that the institutional conditions that generate corruption affect the dividend policy of firms, but this requires further research.