How Payout Policy Affects Companies' Innovation Policy

There is a phenomenon called "quarterly capitalism", when companies are too focused on achieving short-term results, instead of investing and innovating. This study focuses on the problem that companies prefer to distribute cash to shareholders by paying dividends rather than investing in innovation that are necessary for the company in the long term. The relevance of the research topic is that innovation and its development has a positive impact on the growth of national competitiveness for companies. The purpose of this work is to determine the relationship between payments to shareholders and innovative activity of companies. The first chapter is devoted to the analysis of the main sources for the study of the relationship between the company's payments and innovation activity. In addition, the dividend policy was considered, which includes dividends, repurchase of own shares and their issue. The second chapter identifies significant factors that influence the innovative activity of companies. The third chapter contains an assessment of the constructed econometric models, as well as the main conclusions and results. The research methodology consists in the construction of an econometric model based on panel data with fixed effects. The main conclusion of this study is the confirmation of the dependence between payments to shareholders and innovative activity of companies and the dependence is negative. In addition, the hypothesis that more high-tech industries are less exposed to the problem of reducing the ability to invest in innovation because of payments to shareholders was confirmed. The study includes 74 pages, 3 figures, 8 tables and 11 appendix; 57 sources were used.