Determinants of dividend policy of South Korean listed firms

Abstract

Dividend policy continues to be a much debated research topic ever since the seminal works of John Lintner (1956), and Miller and Modigliani (1961). Among the many answered questions, doubt continues to remain on the specific factors that determine dividend policy and whether dividend policy can be structured dependently or independently. The aim of this study is to investigate the determinants of dividend payout policy on the South Korean firms listed on the South Korean Stock Exchange (KRX). In this study, five variables are considered as potential determinants of dividend payout policy. The study develops five research hypotheses, which are used to represent the main theories of corporate dividend payouts. Fixed effect regression model was applied on a sample of thirty listed companies on South Korean Stock Exchange for the period of four years from 2014 to 2017. The model was chosen to test the relationship between dividend determinants and dividend payout policy. The study hopes to potentially increase knowledge in the area of dividend payout policy with a view to improve prediction and establish a relationship between dividend determinants and dividend payout of South Korean firms.