Determinants of dividend policy, dividend policy, dividend yield, birdinhand theory, agency theory. Many of the studies concluded that dividend payment behavior in emer ging countries is significantly different than that of develope d markets. In addition, the study fills the lacuna in the existing literature by focusing on the issue of dividend policy determinants in the context of an emerging economy, namely, malaysia. Some of the most important determinants of dividend policy are. Dividends are payouts of company earnings to shareholders based on the number of owned shares. Dividend policy of firms is one of the most controversial issues of theoretical finance.
Determinants of corporate dividend payout in nepal. Interindustry dividend policy determinants in the context. This paper examines the determinants of dividend policy. Allen and michaely, 2003 and brealey and myers 2005. The dividend per share is used as a proxy of dividend policy. This result is with line with the agency theory of dividend policy. Vast literature has examined the dividend policies of firms from developed countries, especially. Javid 2009 examines the dynamics and determinants of dividend payout policy of 320 nonfinancial firms listed in karachi stock exchange during the period of 2001 to2006. Dividend policy of publicly quoted companies in emerging markets. Moreover, the firms with fast growth distribute the. Issues concerning dividends and dividend policy have always posed challenges to both academics and professionals. This study use a panel data analysis method to investigate the determinants of dividend policy corporate governance mechanism, profitability, systematic risk, firm size, and leverage in in. This paper sought to address this problem by investigating the determinants of dividend policy in kenya. Pdf determinants of dividend policy in saudi listed.
Major theoretical advances in dividend policy decisionmaking have been made over the last few decades. The data employed is derived from the thompson reuters database covered the period from 2000 to 2012. Dividends and dividend policy as part of the robert w. However, the industryspecific determinants of dividend policy display a number of variances that could plausibly be used as an indication of the selection of stocks in specific industries by potential investors. The above fact provides the reason for this researchs examination of the determinants of dividend policy in viet nam, a developing country with the emerging stock market in asia. Dividend policy is one of the most debated issues within corporate finance. It complements the data by using data collected from students of masters of finance and.
International evidence on the determinants of dividend policy abstract in the u. The study employs primary data and uses a questionnaire as a data collection tool, and involves fifteen companies listed at the dse as of december, 2014. The analysis of the determinants of corporate dividend policy belongs to the core issues in modern financial theory breuer et al. Whatever decision heshe makes, whether it is investment decision, financing decision or dividend decision, heshe has to maximise value of the firm. They argued that the dividend yield is less risky than capital gains. The dependent variable of this study is the dividend policy while the independent variables are earnings, cash flow, debt, investment opportunities, firm size and growth. Dividend policy needs a careful selection of its determinants. Similarly, many regulations from developed market including dividend policy of corporation are amended in the turkish commercial code of. There are several determinants of dividend policy that are taken into account, including the desire to remain within the parameters of current trade regulations, and to protect the financial stability of the company. That is, firms tend to have a certain class of shareholders who depend upon the firms dividend policy to obtain.
Determinants of dividend policy in saudi listed companies. While all the pieces to the dividend puzzle may not be in place. The present study is attempted to explore the influence of financial efficiency, safety, risk and profitability on dividend policy using panel data of 10 commercial. Here, a firm settles on the portion of revenue that is to be disseminated to the shareholders as dividends or to be pushed back into the firm. Whereas the determinants of dividend payout are cash, leverage, growth, size, risk, profit. To find out the determinants of dividend payout policy dynamic panel regression has been performed. Amidu and abor 2006 examined the determinants of dividend pay ratio on the platform of financial statements of accepted companies in african exchange within a 6year period. The hausman test reveals that the p value is higher than 0. Determinants of dividend policy are investigated employing dividend yield as a proxy. The results indicate that agency cost is positively related to dividend policy for the basic. In this study, we analyze the determinants of the corporate dividend policy using a sample of firms listed on new zealand stock exchange nzse. Understanding the sources of value creation has always been core issue in finance. Even though an extensive amount of research regarding dividends has been conducted, there is no uniform answer to the question. School of economics and finance, university of western sydney, sydney.
Determinants of corporate dividend policy in jordan. They however concluded that profitability have a positive and significant impact on the dividend policy of nigerian firms. Although miller and modigliani argue that dividend policy does not have a significant effect on a firms value,11 myron gordon, david durand, and john lintner have argued that it does. Determinants of the dividend policy of companies listed on. The determinants of dividend policy in pakistan munich personal. To empirically investigate what firmspecific factors influence a firms dividend policy based on swedish market by studying all small, medium, large caps in sweden. The analysis was depending on some theories that affect the dividend policy such as. In investigating the determinants of dividend policy naceur et al. Many authors say, dividend policy has insignificant impact on the market value of the firm but the dividend policy determined based on the investment opportunities available for the company.
The present study is an endeavour to evaluate the determinants of dividend policy. I m pandey 11 th edition of financial management evaluated the dividend policy determinants and its impact on market value of scrip. A case of pakistan engineering sector kashif imran 1 the return on investment can be divided in capital gain and dividend payouts. The dividend payout policy is one of the most debated topics within corporate finance and some academics have called the companys dividend payout policy an unsolved puzzle. The study found that at the pooled data level for all sectors, free cash flow, return on assets, return on equity, earning per share, market to book value and market capitalization have significant positive correlation with dividend payout ratio. What factors do companies consider for dividend policy. The results suggest that, profitable firms tend to pay high dividend. The determinants of dividend policy for nonfinancial companies in. Indeed, measurements of dividend policy and some determinants of dividend policy vary across studies. Going back to the definition, the value of the firm, which is the sum of equity, debt and. This article examines the determinants of dividend policy of listed companies at the dar es salaam stock exchange dse. The question, when and why do firms pay dividends, is still valid. Pdf analysis of the determinants of dividend policy.
Research journal of finance and accounting issn 22221697 paper issn 22222847 2847. Pdf the present study is an endeavour to evaluate the determinants of dividend policy. Many researchers try to present empirical evidence and differenttheories,where the ultimate goal is. Obenbe et al 2014 in a study of nonfinancial firms in nigeria, observed that profitability is an important determinant of the firms dividend policy. The study considered dividend policy as the it describes the amount of cash to be distributing. From the view point of value maximization, the value of shares depends very much on. Originalityvalue the study extends empirical evidence on dividend policy determinants which are currently reported to be inconclusive. Business perspectives determinants of dividend policy. Establishing a dividend policy is important for business that intends to provide stock issues for investors. The study has been conducted on nonfinancial sector of pakistan. Even though an extensive amount of research regarding dividends has been conducted, the results and conclusions are not without controversy. Pdf pakistans capital market and economy have significant features for examining the dynamics of the dividend policy. The few studies on dividend payout determinants were conducted by abor and amidu 2006, and yiadom and agyei 2011 which explored only the determinants of dividend payout ratio in ghana. Amidu and abor 2006 on their study on determinants of dividend payout ratio in kenya documented that, the results show positive relationships between dividend payout and profitability, cash flow, and tax.
However, different researchers assume that uncertainty, corporate social responsibility csr and stakeholders interest are the important determinants of dividend policy. Hence, this paper explored the determinants of dividend policy of companies listed on the stock exchange of mauritius. Usually a company retains a part of its earnings and distributes the other part as dividend. Introduction dividend policy is an important topic from of the basic theory of corporate finance topics and also the most controversial. At the core of a companys dividend policy are two basic options for how to handle earnings.
This means that firms generally prefer not to change dividends, particularly downwards. Dividend policy is an unsolved mystery in the field of finance. Methodology, data, hypotheses the paper investigates the determinants of dividend policy of polish nonfinancial companies listed on the warsaw stock exchange in poland. Factors affecting dividend policy various factors that have a bearing on the dividend policy maximisation of owners wealth is the objective of the financial managers job. Findings from their study show that firms dividend policy follows the random talk model. A dividend policy is a companys approach to paying dividends to shareholders. Findings reveal that the determinants of cash holding are dividends, leverage, growth, size, risk, profitability and working capital. There are five important determinants identified in this study i. The variable beta, however, has a strong negative correlation with dividend payout ratio. Although cash holding and dividend policy share the same determinants, they do not. Evidence from malaysian firms article pdf available in research journal of finance and accounting january 2015 with 2,034 reads how we measure reads. It is a difficult task for management to allocate a sufficient amount in both segments, especially to prevent from agency problems. Determinants of dividend policy of public listed companies. Determinants of dividend policy in financial management.
The determinants of dividend policy the objective of this paper is to address the basic question of the relevance of dividend policy for the value of the firm. Kolb series in finance, dividends and dividend policy aims to be the essential guide to dividends and their impact on shareholder value. A research paper on impact of dividend policy determinants. Nzse firms traditionally have high dividend payouts compared with companies in the us. Determinants of dividend payout of financial firms and non. There are various determinants of the dividend policies of companies and researchers have worked a lot in determining which factor most contribute to the decision making of the dividend. Many researchers try to uncover the issue regarding the determinants of.