Abstract

This work is focused on studying the impact of dividend policy on stock returns and capitalization of companies in the BRICS countries. The purpose of the study is to identify the features of dividend policy and differences across the BRICS countries and South Korea. The relevance of the work lies in the fact that the cross-country aspects of the dividend policy of companies and the possibilities of factor investment in the BRICS countries remain poorly explored. The objectives of the study include collecting the most representative sample of companies representing the stock markets of respective countries, analyzing the potential for applying dividend factor strategies, identifying similarities and differences in the countries' dividend policies; analysis of the long-term relationship between the capitalization of companies and their dividend policy. Research methods are based on modeling investment strategies, as well as the multivariate capital asset pricing models based on Bloomberg data. The scientific novelty of the study included an expanded sample of companies, collection of a unique database with multiple factors over a fairly long historical period, and the development of a new approach to research based on classical methods. The main results of the study include the fact that dividend payments were growing in most countries, and high dividends did not contribute to the growth of the companies' capitalization. The increase in dividend payments turns out to be beneficial for private investors, who receive a cumulative return above the market average in the long run. The best performing portfolios were those in the markets of Russia and Brazil. We revealed the dividend premiums in the markets of Russia, Brazil, India and South Africa, factoring in the company size and value. The main findings suggest that high dividends can help companies in the BRICS countries attract long-term investors, and this may be the main incentive for companies in implementing dividend policies. At the same time, this strategy is quite risky for the companies, since high dividend payments do not necessarily result in capitalization growth. A further direction of this study is to expand the sample of countries, increase the number of risk factors, increase the historical period for analysis, as well as to include more specific factors, since the topic of dividend policy has not lost its relevance for many decades, especially for developing countries.

Abstract

The purpose of this study is to assess and compare the scale of the state sector in Russia, as well as the impact of the state ownership on the effectiveness of companies in Russia and BRICS countries. The study focuses on the major public companies, including state-ownership enterprises (SOEs). The methodology is based on the classification of the largest private and state-owned public companies, evaluation of SOEs’ contribution to key economic and financial indicators, regression analysis of the impact of state ownership on the financial performance. The state sector growth together with the unstable growth and volatile stock markets has been the trend in many economies since the crises of the last 20 years. The role of the state in corporate governance also increased. However, research on the performance of SOEs has become scarce, with virtually no reports from international financial organizations on the subject in the past few years. The issue of cross-country comparisons of the state role in the economy remains unsolved even thought it is of great theoretical importance in the discussions on models of state capitalism and development of methodology of state sector analysis, and is relevant for the management decisions in long-term strategies of socioeconomic development. The novelty of the study lies in the fact that the authors, using their own methods, collected and updated until 2021 indicators of the scale of the state sector, identified issues of assessment of the state sector, and used a unique database of companies from BRICS countries to study the performance of SOEs. The main results are the development of methodological approaches to the assessment of the state sector, updated state sector scale measures up to 2021, which show a continuing trend of growth. The authors have also shown how ambiguous are the existing solutions to measuring the size of the state sector and how large is the gap in estimates. The paper also shows that the state ownership had predominantly negative effect on companies’ performance in BRICS countries and South Korea. The main conclusion of the work is that it is necessary to develop a methodology that allows for an integrated assessment of government intervention on the economy, and to upgrade existing databases to increase corporate information transparency, both private and SOEs. This is especially important for the Russian economy, given the trend towards state sector growth. Such measures will improve the accuracy of state sector research and allow to improve the pace of economic recovery and ongoing monitoring.