The Wedge between Ownership and Control and Dividend Policy of Russian Companies

Corporate governance is a complex and important mechanism that allows you to create a successful company that can grow and systematically improve its performance. Dividend policy is one of the pieces of this mechanism that affects the evaluation of the company by the market, potential investors and existing shareholders. Dividend policy is able to solve arising conflicts within the company. But, the distribution of ownership and voting rights between shareholders, as well as the imbalance between these rights, can have a significant impact on the company's dividend policy. In this paper, we study the influence of the structure of ownership and control rights on the dividend policy of Russian firms. In particular, we examine the impact of the wedge between ownership and control arising from the presence of several types of shares in a company. Empirical analysis is carried out on a unique set of data on Russian public companies for the period 2009-2019, which includes data on dividend payments on preferred and ordinary shares, information on the largest shareholders, on their share of control and voting rights in companies. For analysis, the following econometric models were used: pooled OLS, fixed-effects model, random-effects model and a Tobit model. An analysis of the results showed the negative impact of the share of ownership rights hold by the largest shareholder on the probability of dividend payment. We also received that the share of the rights of the second major shareholder has a positive effect on the probability of dividend payment. The main result of the work is the confirmation of the hypothesis about the negative impact of the wedge between ownership rights and control rights of the majority shareholder on the level of dividend payments. This indicates the implementation of the theory of expropriation of minority shareholders in the presence of a wedge between property rights and control rights. The gap between the rights of the second major shareholder has a positive effect on the dividend policy, which is consistent with the results of previous studies, in which this effect is associated with the regulatory role of the second major shareholder.