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Nikita Konstantinovich Pirogov - HSE. E-mail: npirogov@hse.ru Artem Eduardovich Anilov - HSE. E-mail: tema_anilov@mail.ru Financing and payout decisions generally affect company’s economic performance: they have impact (both directly and indirectly) on the free cash flow and, thus, on company’s and shareholders’ value. Search for optimal capital structure and optimal payout policy strategy that are likely to maximize shareholders’ utility resulted in the papers, dedicated to determinants of capital structure and payout policy. In such papers, one of the policies is usually treated as a determinant for another one. This bound does not let researchers to make some conclusions about existence or absence of interrelation between payout and financing choices. To capture this interrelation, simultaneous regression analysis should be performed. Researchers, though, cannot come up with unified conclusion about the existence and direction of such interrelation.The absence of certain results as well as low level of research done on emerging markets make this topic rather relevant.The results of recent research on the interrelation between payout and financing decisions are discussed in this paper. We also develop an econometric model that allows us to check the existence of interrelation in emerging markets and to compare the results to those obtained from developed markets.The article contributes to the existed literature in the following directions: first, two debt variables are taken into account (total and long-term debt) as well as two payout policy variables (total payout and dividend payout). Second, macroeconomic variables are controlled. Third, the results obtained from the companies from emerging countries are compared to those obtained from developed markets.

This paper aims to discover evidence on the possible impact of CEO overconfidence on payout policy, and the role ofcorporate boards in offsetting the possible negative effects of this overconfidence. Our investigation demonstrates theeffect of overconfidence on the choice of payout method, specifically regarding the repurchases-dividends mix. Wealso evaluate the ability of corporate governance mechanisms to reduce or even eliminate the negative effects of CEObehavior on payout decisions.This study is conducted using a sample of 671 non-financial companies from the US for the period of 2007–2016. Weapply probit regressions to study different aspects of payout decisions, and use a panel GMM estimator to check forpossible endogenous effects. Using a corporate governance quality index, we test the ability of boards of directors toreduce negative effects of CEO’s overconfidence on the payout decisions.Our findings confirm the hypothesis that overconfident CEOs tend to increase the levels of payout in the form ofrepurchases, while the levels of cash dividends are unaffected by this type of CEO behavior. Moreover, an overconfidentCEO is more likely to initiate repurchases if this has not been done already. The results further illustrate thatoverconfident CEOs not only pursue higher levels of repurchases, but also switch more often from cash dividends torepurchases. However, it is also shown, in contract to previous research in the field, that efficient boards of directors havevery limited power in eliminating the negative effects of CEO overconfidence.This paper contributes to the existing literature by analyzing the specific area of CEO overconfidence using data fromthe United States, and follows specific lines of inquiry which have not been deeply studied. Further possibilities toexplore the implications of this research exists particularly in the consideration of its apparent contradiction of previousresearch. There is yet scope to determine applicable tools of reducing the negative effects of specific CEO behaviors. It ispossible to identify and investigate other relevant behavioral characteristics that may influence payout decisions. Further,these characteristics may be evaluated to see if the operation of these interrelations reproduce alternative results in termsof the effect of corporate governance, both in the US and in other markets.

The question of the significance of the payout policy in terms of value creation has been in the works for over 50 years now. These endeavors have led to the establishment of some classic theories that explain the different patterns in a company’s payout policy choices such as the signaling theory, the agency costs theory, the clientele theory and the catering theory. However, the results are not always consistent among different authors, which means that these theories cannot be used universally. Results vary widely among different samples and different time periods. The classic theories assume that all agents on the market are fully rational, which is rather unrealistic since an agent’s actions cannot always be explained by financial theories. These two facts led to the development of the behavioral explanation for the payout policy choice. This approach focuses on the behavioral characteristics of managers that are responsible for the decision-making process in the company. Thus, the payout policy, according to this approach, is considered to be a function of the behavioral characteristics of managers (overconfidence, optimism, risk preferences, etc.) rather than a function of the financial variables. The main difficulty here is how to measure the behavior of managers. This particular article reviews the research that covers the classic and modern theories of payout policy. This article covers the logic of the development of different views on the payout policy. The authors cover articles that test different theories, analyze the main results and conclusions, and investigate the reasons for the development of these theories. The main focus has been on the behavioral approach, which is considered to be the most fruitful direction for future research. The authors also cover the methodology of the existing papers, the variables that measure behavioral characteristics and the results.