The Specifics of the Dividend Policy of Russian Joint Stock Companies

This article presents an overview of contemporary dividend policy theories. The authors focus on the dividend irrelevance theory by M. Miller and F. Modigliani. The high practical value of the signaling theory by S. Ross is considered. Theories of dividend policy are classified as lack of relevance theories and theories of dividend significance. Methods of dividend payment are designated on the basis of the theories of dividend policy. The authors note that the theories of dividend policy are still not well developed in foreign financial research. In Russia, such studies are almost non-existent. The amendments to the Russian Federal Law ‘On Joint Stock Companies’, which came into effect on January 1st, 2014, relate to the procedure of setting the record date and the payment date for dividends. These changes significantly improve the positions of minority investors and reduce the possibility of dividend intrigue. The article analyzes the edict from the Russian Federation on the mechanism of determining the share of dividends in profit of joint stock companies whose shares are in federal ownership. Today, according to the Russian Standards of Accounting, there is a 25% standard of net profit, however, it is not observed by all federally-owned joint-stock companies. The authors analyze dividend policy of the largest Russian joint-stock companies, including OJSC ‘Gazprom’, OJSC ‘Sberbank’, OJSC ‘Lukoil’, as well as draw a conclusion relative to their affiliation with certain methods of dividend payment. The features of dividend policy of Russian joint-stock companies have been determined in the article. The most important of these are as follows: a practice of low dividend payout, excess yield of privileged shares over ordinary shares, industry-specific payout, as well as weak activity by minority shareholders. The low dividend payout practice implies that the average dividend rate of the Russian issuers is about 10-20% of net profit. The industry-specific payout means that petroleum and metallurgical industries prevail in the payout structure. Finally, such specifics are typical of emerging markets and characterize the gradual development of the dividend culture of the Russian securities market.

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