Abstract
The paper examines the factors influencing dividend payout decisions. Our analysis is based on unbalanced panel data with 799 observations of companies from 15 countries over a period of 14 years. The study develops eight research hypotheses and uses a modelling approach based on the random effects panel probit model. An important conclusion reached in our study is that a company’s financial situation in preceding year influences the dividend payout decision. In addition, the key significant determinants of dividend payout decision in the period covered by our study include free cash flow, growth, liquidity, profitability and size. These important research results are confirmed by other studies in the field. They are therefore essential for determining dividend policies. Individual effects across investigated enterprises also played an important role in the dividend policy.
Highlights
Dividend is a price that a company pays to investors for the capital invested by them in the company
We propose the following hypothesis: H7: There is a positive correlation between dividend payment and liquidity
Similar results were obtained by Consler and Lepak (2016) who investigated the phenomenon of dividend payments during the financial crisis
Summary
Dividend is a price that a company pays to investors for the capital invested by them in the company. For this reason, dividend payout decisions do not depend solely on financial results and cash flow distribution. The issue of dividend payout in a given company, called the ‘dividend puzzle’, gives rise to several research problems that could be studied at various levels of detail. One of these problems relates to the companies’ financial condition.
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