Determinants of Dividend Payments of Russian Companies

Russian stock market is the leader by dividend yield among developing and developed countries. Considering this, it is important to study the determinants of dividend payment decisions. Scientific literature on the topic of the determinants of dividends in emerging markets in general and specifically in the Russian market has a number of gaps and contradictions that determine the novelty of this work. Analysis is conducted both in terms of the impact on probability of payments and on dividend yield, contradictory determinants are also studied. We close gaps in study of such determinants as age of the Board of Directors, personal income tax rate on dividends in emerging markets and in Russian market in study of such determinants as size of the Board of Directors, ownership share of CEO, share of shareholders-organizations, lifecycle stage and duality of the Chairman of the Board of Directors and executive director. Empirical study is conducted on a sample of 40 companies listed on the Moscow Stock Exchange, the data is collected for the period from 2012 to 2019. As a research method we use two regression models: linear model with random effects and probit model. As a result of empirical analysis, the agency effect in the Russian market is confirmed by significant positive dependence of payments’ probability on duality of the Chairman of the Board of Directors and executive director and on share of stock held by CEO and also by significant negative relationship with the Board of Directors’ size and company’s liquidity. Agency and behavioral effects are confirmed by significant positive relationship between probability of payments and age of the Board members, and by significant negative relationship with dividend yield. The impact of clientele effects is confirmed by significant positive relationship between dividend yield and personal income tax rate and the same relationship of payments’ probability with share of organizations in ownership. It is also confirmed that mature companies pay dividends more often and with bigger dividend yield. In general, there is more influence of non-financial variables on probability of payments and greater influence of financial variables on dividend yield.