Dividend Policy: the Impact on the Market Value of Companies

The topic of the thesis is "Dividend policy: the impact on the market value of companies". The paper is devoted to the research of interrelation of changes in the size of dividend payments and the price reaction of the Russian stock market. In 2018-2019, there was significant growth in the stock market, as well as in dividend payments. Therefore, even though there are similar studies on the Russian market, there is a need to compile a new sample and check the results obtained by domestic researchers on the new data, since it is possible that significant growth of the market could affect its structure, and therefore the sign of the reaction of stock returns. In this research, the theoretical questions of dividend’s policy formation are considered: the main approaches to the justification of optimum dividend policy and its classification. The review is given to scientific discussions about the connection between dividends and the company’s market value. Also, the practical part involves the use of an event study method, which is based on an overview of research papers that use the same methodology. The final database included announcements of 26 Russian public companies, which happened from 2015 to 2019. The following tasks were set and solved: - analysis and systematization of existing theories of dividend policy; - justification of the choice of the research method, as well as a description of the event analysis algorithm; - data selection for the study, based on a sample of public Russian companies that pay dividends; - assessment investors’ reaction of investors to the news about the amount of dividends paid; - checking for the normality of the obtained results, as well as testing their significance using parametric test; - analysis of practical results and their comparison with similar studies on this subject. According to the results of the study, which included 220 announcements of changes in the number of dividend payments, an average negative reaction was revealed in response to information about the growth of dividend payments. The assumed explanation is that investors interpreted the received signal as the company's lack of projects for investment, as well as a development strategy. At the same time, on average, the cancellation or reduction of dividend payments was even more negative, signalling the company's likely financial difficulties, as well as a possible decrease in profits due to insufficient performance of its activities. The hypotheses were that (1) the news of an increase in dividends compared to the previous period will not be perceived as a positive signal for the market; (2) there are differences in reactions (2) by industry and (3) periods have been confirmed. It is important to emphasize that the results obtained, namely, negative Cumulative Average Abnormal Return, CAAR in response to both "good" and " bad " news, correspond with the results of domestic researchers, obtained earlier.