Dividend Payouts of Russian Companies against the Backdrop of Financial Crisis

Abstract

Andrey Borisovich Ankudinov- E-mail: ankudia@mail.ru

Oleg Vladimirovich Lebedev - E-mail: lebolegan@yandex.ru

The article presents results of empirical study of trends in dividend payments of national companies against the backdrop of crisis-period credit crunch. The analysis is based on the panel data; the sample is formed by data covering the 2003–2011 period for the largest companies representing nonfinancial sector of national economy. Research method was comprised of two stages: first the univariate analysis was performed of relationship between individual characteristics of companies and their dividend policies, then – multivariate analysis based on regression testing of panel data. The obtained estimates show that the approaches to profit distribution developed by Russian companies so far result in many companies not paying any dividends at all (66% of observations representing dividend payouts amount to zero values). On average the payout ratio was around 8.5%, reaching 25% for the subsample of companies – payers of dividends. This is lower than dividend payouts of companies representing developed as well as most of developing markets. Besides, the payout ratios sample is characterized by significant variation of data with time as well across the sample. Decrease in dividend payments during the crisis years can be distinctly identified. In the pre-crisis years state-owned and privately-owned companies had maintained approximately the same level of dividend payout ratio while in the post-crisis period the latter distributed larger portion of corporate profits. Differences in the amounts of dividends paid by public vs. non-public companies go down in the crisis years, however the first are still characterized by much more generous dividend policy. Unobserved individual characteristics of companies appear to affect significantly profit distribution. Company profitability and size are positively while financial leverage is negatively related to the likelihood of dividend payments as well as to the actual amount of dividends paid. Positive relation between profitability and payout ratio becomes stronger in the post-crisis period, while at the same time the negative relation between financial leverage and dividend payments tend to become less pronounced.