Government Ownership and Dividend Policy of Russian Companies

This research is devoted to studying the impact of state ownership on the company's dividend policy. The relevance of the research is conditioned by the fact that in Russian companies state ownership continues to hold a significant share, especially in the largest firms. In this paper, the impact of the equity structure is estimated by analyzing a database consisting of information on the financial results of the firm and information about shareholders for 376 companies from all sectors of the Russian economy whose shares were traded on the Moscow Stock Exchange in 2009-2018. The company's dividend policy is analyzed in two aspects. Firstly, it is a prediction of the firm's propensity to pay dividends (logit model). Secondly, it is a prediction of the share of net profit that will be used to pay dividends to common shares' holders (two-way fixed-effect models and tobit model). The estimation of impact of the capital structure shows that government ownership has a positive effect on both the probability of dividend payment and the dividend yield coefficient. Looking separately at clusters of companies with and without state ownership, we find out that only a third of private companies make a dividend payment, while 65% of state companies pay dividends. The assessment of the impact of state-owned shares shows that the state has a positive impact on dividend payments until a certain point, when the threshold of 37% of shares is crossed that impact becomes negative.