Determinants Of Dividend Policy Research Articles

Demystifying Dividend Yield: Unveiling the Impact of Financial Metrics in Malaysia's Top 100 Ranked Companies

This research examines the complex link that exists between dividend yield and return on assets (ROA), audit quality, business size and liquidity among Malaysia's top 100 ranked companies in 2022. A statistically significant positive correlation has been shown between ROA and dividend yield, suggesting that increased profitability is generally associated with larger dividend yields. This research lends credence to the signaling theory, which holds that companies use their dividend policy to communicate to investors their financial stability and confidence. In a similar vein, there is a notable positive correlation between AQ and dividend yield, which emphasizes the importance of strong audit procedures in boosting investor trust and raising dividend payments. Additionally, the research reveals a noteworthy affirmative association between firm size and dividend yield, underscoring the influence of market capitalization on the determination of dividend policy. Consistent with signaling theory, larger corporations use dividends as a strategic way to communicate their commitment to shareholders because they are seen as more financially reliable. Furthermore, a strong positive correlation has been shown between liquidity and dividend yield, highlighting the crucial role liquidity plays in determining dividend payout policies and providing investors with a sense of financial safety. This study, which makes use of signaling theory, sheds light on how businesses strategically employ dividend policy to convey important information to the market, boosting investor confidence and improving market repute. The practical ramifications of these findings include enlightening investing strategies and giving investors insight into the factors influencing decisions about dividend policy. Theoretical contributions include deepening our understanding of the intricate relationship between dividend policy and financial indicators in the context of signaling theory and providing insightful information for further study.

Corporate Taxes, Dividend Policy and Firm Performance in Nigeria Quoted `Firms

Purpose: This study examined corporate taxes, transaction cost, and dividend policy in Nigeria quoted firms. The main purpose of this research is to ascertain the relationship between taxes, transaction cost, and the dividend policy of quoted firms in Nigeria. Materials and Methods: The research adopted both statistical and econometric techniques to analyze data obtained from the Nigeria Stock Exchange between 2018 to 2022. The research work employed an ex-post facto research design to obtain, analyze, and interpret the relevant data for hypotheses testing. Simple random sampling and proportionate stratified random sampling was used to select 36 firms quoted in the Nigerian Stock Exchange to ensure all sectors are represented in the sample size. The data was analyzed and presented using E-views 12 statistical software. Using the OLS panel model, the fixed effect OLS model was considered the most appropriate for the empirical modeling and analysis of the equations. Findings: Our findings in this study indicated that dividend payout ratio (DPR) has a negative and insignificant relationship with current income taxes (CIT), deferred taxes (DTL). Company size (SIZE) has positive but not significant relationship with dividend payout while assets growth (GHT) and leverage ratio (LEV) have positive and insignificant relationship with dividend payout (DPR). Also, dividend per share (DPS) has a positive relationship with company income taxes (CIT) but negative relationship with deferred tax liabilities (DTL). Implications to Theory, Practice and Policy: The study was informed by the “Dividend Policy Theory” The debate on whether corporate taxes has impact on dividend payments of companies is unending. The result of the study is consistent with the findings of scholars and researchers with similar interest such as Jensen and Johnson (1995); Miller and Scholes (1982). It is, therefore, recommended that companies should concentrate on other determinants of dividend policy and not corporate taxes and transaction cost, since corporate taxes and transaction cost have no significant effect on dividend policy. Management should design a dividend payout policy that maximizes market value of quoted firms.

The dividend policy of business entities and the analogy of law

Author discovers uncertainty that generates ambiguous administrative and judicial law enforcement on the issue related to the limits of business entity freedom in the creation and implementation of dividend policy. Importance of such insufficiently clearly regulated by corporate legislation aspects of the dividend policy as the scope of corporation's powers and limitations in determining frequency of making decisions on dividend payments and timing of the actual distribution of profits among the corporation's participants is shown. Special relevance of the doctrinal study and regulatory clarification of the relevant legal parameters of the dividend policy of domestic corporations is associated by the author with the need to overcome the negative consequences of the sanctions impact of unfriendly foreign states. The presented author's approach is aimed at ensuring greater variability of corporate and legal interaction and increasing the efficiency of business entities. Special technical and legal tools were used in the study, including the method of analogy, as well as civilistic means of analysis and synthesis, comparison and generalization. The idea of the possibility and practicability of flexible negotiation of this uncertainty based on the normative construction of the analogy of law, on the basis of the general principles and meaning of civil legislation, as well as through the analogical use of explanations on understanding of the imperativeness and optionality of legal norms contained in the Resolution of the Russian Federation Supreme Arbitration Court Plenum dated March 14, 2014 No. 16 «On freedom of contract and its limits» is argued. As a result, conceptual admissibility of «nonmonotonic» dividend accruals, not linked to calendar quarters has been proved, as well as the possibility of large delays in the actual payment of declared dividends in comparison with the periods pre-established by norms. Main conditions for the implementation of such a measure of freedom in determining dividend policy are identified, namely its focus on achieving a balance of corporate interests and availability of an actually generated net profit for a business entity.

Are dividends impacted by the timing of macro data releases? Case of WIG, DAX and S&P500

Purpose: This paper attempts to reveal, on the one hand, whether dividend paid by dividend-paying companies from the WIG, DAX and S&P500 indices for the period 2017-2022 were characterized by positive dynamics of change in real terms, and whether decisions on the level of dividends recommended for payout are more determined by macroeconomic factors from the end of the year, in which the company generated financial results, or from the period, in which dividend decisions were made. Design/methodology/approach: The research objective of this paper is accomplished by means of a thorough literature analysis. In the area of statistical methods, the authors refer to classical methods of correlational analysis, with a focus on non-parametric methods (Spearman’s rho and Kendall’s tau). Findings: The analyses carried out made it possible to indicate that, for companies listed on the FSE and WSE, the only quantity correlated with changes in dividends paid is the PMI index, with a negative correlation for Polish companies and a positive one for German companies. This correlation occurs only if one considers December macroeconomic data readings. On the other hand, for NYSE-listed entities, statistically significant relationships were obtained for the PMI index (negative), the inflation rate (negative) and interest rates (positive). With the exception of interest rates, the correlations apply to both December readings and those from May of the dividend payout year. At the same time, the results indicate different decisions made by the boards of US, German and Polish companies in the face of the SARS-CoV-2 pandemic. Research limitations/implications: The study was conducted on a limited number of analyzed companies and for a limited time range. Therefore, it could be biased, due to the deterministic stock sampling method and the research period. Practical implications: Expanded knowledge of the impact of the timing of publication of macroeconomic parameters on decisions on dividend payouts and their amount. This knowledge is important for both investors and investment funds’ boards. Consequently, one can make better investment decisions. Social implications: Among the paper’s social implications, the most important appears to be a possible change in the investors’ attitude towards dividend-paying companies that not only pay dividends systematically, but also have positive dynamics of change, and the realization that dividend decisions are affected not only by a number of determinants, but also by the timing of their occurrence. Ultimately, investors’ needs could be better addressed. Originality/value: The paper evaluates the impact of macroeconomic determinants on changes in dividend payouts by companies for the period 2017-2022. What is new in the paper is the analysis of whether the timing of the publication of macroeconomic parameters significantly affects the level of dividends paid, thereby filling our knowledge gap. Keywords: dividend-paying companies, determinants of dividend policy, macroeconomic indicators, inflation. Category of the paper: Research paper

Determinants of dividend policy in small and medium-sized enterprises of an emerging market

This paper aims to analyze the determining factors of dividend policy in SMEs of an emerging economy such as Colombia. SMEs are very important for emerging economies, as they are great job creators and contribute to improving the quality of life of many families. This study is based on liquidity, profitability and indebtedness variables, to demonstrate their links with the dividend policy in this type of entities on which there is not enough empirical research in the Latin American context. A panel data with a total of 11,888 observations was estimated for the horizon 2017-2019. The results evidence that liquidity and profitability increase SMEs’ dividend policy. Indebtedness level indicators present a negative relationship. Overall, the results provide empirical evidence on this important financial decision in a scarcely studied business context and segment. Additionally, the factors influencing dividend policy for these firms have practical implications for regulators, investors, and financial analysts to strengthen their decision criteria in emerging economies.

Pengaruh Profitabilitas, Kepemilikan Manajerial, Leverage Dan Ukuran Perusahaan Terhadap Determinan Kebijakan Dividen Pada Perusahaan Manufaktur Yang Terdaftar Di BEI Tahun 2019-2021

The research intent to find out to what extent the profitability impact, managerial ownership,leverage, also company size about the determinants of dividend policy in manufacturing companies on the Indonesia Stock Exchange for the 2019-2021 period. In this study, the population are 56 manufacturing companies. Samples were taken through purposive sampling technique so that 22 companies were obtained in a 3 year period, so a total of 66 samples were obtained. The data was taken from www.idx.co.id (website) which is secondary data. The results showed that profitability formulated with ROE had no partial effect on the determinants of dividen policy, managerial ownership had a partial effect on the determinants of dividend policy, leverage was used to measure DER on the determinants of dividend policy which had a partial effect, LN was used to measure firm size which had a partial effect on the determinants of dividend policy. Then simultaneously ROE,DER, Managerial Ownership, and LN affect the determinants of dividend policy.
 
 Keywords : Profitability, Managerial Ownership, Leverage, Firm Size, and Dividen Policy

The Effect of the COVID-19 Pandemic on Corporate Dividend Policy of Moroccan Listed Firms

The recent literature provides conflicting findings and remains inconclusive regarding the impact of the COVID-19 crisis on firms’ dividend policies. In this paper, we examine the dividend policy of Moroccan firms listed in the Casablanca Stock Exchange during the COVID-19 shock. Using panel data from 2015 to 2021 of non-financial listed firms, we observe that the proportion of dividend cuts during the last seven years (2015–2021) achieved its highest level on the onset of the crisis. Furthermore, results of the ordinary least square (OLS) regressions demonstrate that the COVID-19 shock has negatively affected the dividend payout of Moroccan listed firms. This study implies that, in times of economic crisis, Moroccan firms exhibit risk-averse behavior by prioritizing the retention of earnings over distributing dividends, scarifying, therefore, the transmission of positive signals to investors and external stakeholders. Furthermore, our results reveal that profitability, growth opportunities, leverage, and size are relevant determinants of corporate dividend policy.

Determination of Dividend Policy in Indonesian Banking

The company's dividend policy must be formulated with two primary objectives, namely providing adequate financing and maximizing the wealth of the company's owners. Shareholders see dividends as a signal of future banking success, stable and sustainable dividends are a positive signal, and vice versa. This study aims to determine the effect of profitability, liquidity, capital adequacy, institutional ownership, and asset growth on dividend policy. This type of research uses explanatory research. The research sample consisted of 13 banks listed on the Indonesia Stock Exchange from 2015-2019. The results show that profitability has no effect on bank dividend policy, liquidity has an effect on bank dividend policy, capital adequacy has an effect on bank dividend policy, institutional ownership has no effect on bank dividend policy.

Determinants of Dividend Policy: Growth Opportunities, Business Risk and Leverage with Size as Moderation

To find out whether investment opportunity set, business risk, and leverage affect dividend policy. To determine whether firm size can strengthen/weaken the effect of the investment opportunity set, business risk, and leverage on dividend policy. In this study, dividend policy is measured by dividend payout ratio (DPR), investment opportunity sets are measured using proxies based on the market-to-book value of equity (MBVE), business risk is calculated using the basic earning power ratio (BEPR) proxy, and leverage (debt to equity ratio) as a ratio that describes how much the company conducts debt policy. The firm size variable used in this study is measured using the natural logarithm of total assets. This research is quantitative application research, this research uses interaction test analysis or better known as moderated regression analysis (MRA). The sample was selected using a purposive random sampling method in companies going public on the Indonesia Stock Exchange in the consumer sector for the period 2017-2021. The results of this study indicate that investment opportunity sets do not affect dividend policy, low business risk has a positive effect on dividend policy, and leverage has a positive effect on dividend policy. Size can moderate of the investment opportunity set and low business risk on dividend policy but size cannot moderate the effect of leverage on dividend policy.

Applications of Machine Learning and Determinants of Dividend Decision : Evidence from Indian Firms

Purpose : The theories of dividend decision have disentangled the firms’ critical drivers of the dividend announcement, and their performances are empirically evaluated by employing ordinary least squares (OLS). However, after more than half a century of research, the debate over the determinants of dividend policy in firms is inconclusive. Therefore, the current study attempted to contribute to the literature by exploring new insights into the dividend decisions of Indian firms by employing machine learning. Methodology : This study is based on secondary data, and empirical analysis has used a novel dataset of 919 listed Indian nonfinancial firms from 1999–2019. The study utilized the least absolute shrinkage and selection operator and logistic regression methodologies. Findings : The findings revealed that the idiosyncratic variables are critically significant for dividend announcements by Indian firms. The results demonstrated that large, profitable, liquid, and firms with high market share were more likely to announce dividends in India than small, loss-making, illiquid, and low-market share firms. The direct relationship between Tobin’s Q and the likelihood of paying dividends is a new insight into the dividend decision for Indian firms. Practical Implications : The results will guide the dividend seeker investors to hold the shares of a high market share firm to receive the expected dividend. Originality/Value : This current study extended the literature by studying the dividend decisions of Indian firms by employing the machine learning methodology.

Impact Of dividend decision on the market capitalization of the firm: Evidence from Indian large cap companies

The percentage of the profit distributed to the shareholders is known as the dividend. The decision at hand is how much of the company's profit should be divided to the shareholders after taxes have been paid. It also contains the portion of the profit that needs to be invested back into the company. The retained earnings boost the company's potential for future earnings when the present income is reinvested. The amount of retained earnings has an impact on the company's choice of financing as well. The decision to declare a dividend should be made with the goal of maximizing shareholder value in mind. The present study attempted to evaluate the impact of dividend decision on the market capitalization using regression model. The regression analysis model revealed the significant impact of the independent variable on the market price of the share as well as the dividend policy determinants on the subsequent market price variable.

Determinants of Dividend Policy: Evidence from Malaysian Public Listed Companies

Dividend policy has become one of the important issues in any corporation since it relates to investment and financing decisions that a firm makes. It is crucial for a firm to build a strong understanding of dividend policy as corporate dividend policy gives a huge impact on a firm’s decision in key areas such as capital budgeting, asset pricing, mergers and acquisitions, and capital structure. The aim of this study is to examine the factors that will determine dividend policy decisions made by public listed companies in Malaysia. Among the variables included in this study are leverage, liquidity, profitability, firm size and corporate tax. Quantitative research method was chosen for this study and eighty-three (83) public listed companies in Malaysia were selected as a sample size based on annual data during 2013-2017. Multiple regression analysis was used to test research hypotheses. Other tests including Diagnostic test, Normality test, Multicollinearity test, Autocorrelation test, and Pearson’s Correlation coefficient analysis were also conducted in this study. The findings revealed that leverage and liquidity which were measured by debt to equity ratio and current ratio, respectively, have insignificant impact on dividend policy which was measured by dividend payout ratio. This study also provide new insights into profitability, tax, and firm size which were measured by return on equity (ROE), corporate tax, and ln(total assets) have a significant positive relationship with dividend policy. Future research on the determinants influencing dividend policy may take governance structure types into account. This is owing to the fact that businesses operate in various governance systems with varying types and histories in various industries and nations, which may result in varying representations of dividend policy.

Different Market Segmentations of Dividend Policies: A Dynamic Panel Data Analysis

Objective - Despite much previous research on the issue, dividend policy remains an unsolved conundrum in corporate finance. By considering this, the goal of this research is to use the Generalized Method of Moments to examine dividend behaviour by identifying the key determinants of dividend policy in three different countries with different market microstructures: Singapore (developed market), Malaysia (developing market), and Saudi Arabia (emerging market). Methodology/Technique –. The study uses data from each country's top 100 listed firms from 2007 until 2016. The results suggest that different determinants influence firms’ dividend policies for the three countries. Findings - For Singapore as a developed market, profitability, and size are shown to be significantly and positively related to the dividend payout ratio, whereas leverage, business risk, and growth opportunities exert a significant negative effect. Meanwhile, for Malaysia (a developing market), only firm size is a significant and positive determinant. However, leverage and business risk are negatively and significantly associated with the dividend payout ratio. Conversely, for Saudi Arabia as an emerging market, firm size and leverage positively and negatively influence the dividend payout ratio. Novelty - Therefore, this study employed the generalized method of moments (GMM) to uncover novel discoveries. The findings should motivate analysts, policymakers, institutional investors, and investors to investigate the dividend policy conundrum, mainly for three different market segmentations. Type of Paper: Empirical JEL Classification: G32, M14. Keywords: Dividend behaviour, market microstructure, and Generalized Method of Moments. Reference to this paper should be referred to as follows: Shafai, N.A; Yusuf, N.H.M; Shah, N.S.B; Bulot, N. (2023). Different Market Segmentations of Dividend Policies: A Dynamic Panel Data Analysis, Acc. Fin. Review, 7(4), 01 – 11. https://doi.org/10.35609/afr.2023.7.4(1)

Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data

This study aims to determine effect of capital structure and profitability on dividend policy by including firm size as a moderating variable. The samples in this study were 26 companies from 65 Basic Industrial and Chemical Manufacturing Sector Companies listed on the Indonesia Stock Exchange in 2011-2019, which were determined by purposive technique. The results showed that firm size is a variable that determines the strengthening and weakening of the relationship of capital structure with dividend policy also between profitability with dividend policy. Increasing firm size or increasing company assets do not provide incentives to increase the level of company profitability as measured by return on equity. Likewise, an increase in company assets does not provide incentives to increase dividend ratios, as an estimate of an increase in company income due to increased production capacity and company sales capacity. The larger firm size provides an incentive to increase the debt ratio because of the increasing need for funding to increase its investment in long-term assets. An increase in company size is also an indication for an increase in dividend ratios due to the estimated increase in company profits due to increased company revenue. Therefore, the determinants of capital structure and dividend policy in emerging markets such as the Indonesian market share the same set of suggested factors with the developed markets.

Determinant Factors of Dividend Policy in Cooperative Organization

Dividend policy is one of the functions of financial management with regard to the distribution of corporate earnings after tax or the cooperative surplus to the owner. Dividend policy in cooperatives organization is regulated based on regulations and member agreements stipulated in the articles of association and by-laws of the cooperative. The purpose of this study is to analysis the determinant factors of dividend policy in cooperative organization. This study uses research and analysis of descriptive qualitative approach. Data were obtained from 4 cooperatives, where the cooperative determined with consideration of routinely distributing cooperative surplus.The results of the study show that the determinant factors of cooperative dividend policies are found in several additional determinants such as: member participation, cooperative principles, member conditions and regulation, in addition to determinants that have been widely researched and used as guidelines for in general, such as: liquidity, profitability, firm size, capital requirement (leverage), and risk. New findings from the determinants of dividend policy in cooperatives organization such as member participation, cooperative principles, member conditions and regulation need to be studied further with a quantitative research approach, so that the conclusions can be generalized.

Corporate Social Responsibility and Dividend Policy in Indonesia : Advent of Firm Size as a Moderator

This research aims to analyze the determinants of dividend policy. The independent variable in this study is corporate social responsibility which will be moderated by variable firm size. While the dependent variable is dividend policy, and the control variables are leverage, growth opportunity, and firm’s age. The sample of this study uses 35 companies listed on the LQ45 Index for the period of 2019-2021. The sampling technique uses purposive sampling and the analysis method uses panel data regression. The results explained that corporate social responsibility, the moderating variable firm size, and growth opportunity do not affect dividend policy. Firm’s age has a significant negative effect on dividend policy. Leverage has a significant positive effect on dividend policy. The implication of the research that has been done is to provide direction for financial managers to consider the benefit of increasing leverage to a strategic investment for a productive assets and business expansion which lead to generate more profit for company which means a positive impact on dividend paid to shareholder. As for investors, investors should pay attention with the maturity of the business and significant amount of CSR cost since these will affects negatively to the company's dividend policy.

DETERMINANTS OF DIVIDEND POLICY OF LISTED OIL AND GAS FIRMS IN NIGERIA

The largest companies worldwide face the challenge of differentiating the amount to pay as a dividend and the amount to retain for internal use. This study, therefore, aims to examine the main determinants of dividend policies of oil and gas firms in Nigeria. The primary study objective was to study how determinants like earnings, liquidity, state of the economy, and total assets of the companies significantly impact the dividend payout ratio of listed oil and gas companies in Nigeria. Ten listed oil and gas companies were selected, and secondary data were gathered from their financial statements from 2010 to 2020. The fixed effect and the random effect regression analysis estimated the data, while other post-estimation techniques, such as the Hausman test, were used to select between the fixed and random effect panel regression that was the best fit for the study. The Hausman test selected the fixed effect regression. Therefore, findings from the fixed effect regression showed that earnings and the state of the economy were positively significant in impacting the dividend payout ratio. Total assets were negatively significant, while liquidity was insignificant, affecting the dividend payout ratio. The study recommended, among others, that Nigerian oil and gas firms should build and manage their total assets effectively and efficiently, as this would determine and influence their dividend policy decisions.

4. Determinants of dividend policy of Islamic banks in Bangladesh

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Determinants of Dividend Policy in Foods and Beverages Manufacturing Firms in Nigeria

Determinants of Dividend Policy in Foods and Beverages Manufacturing Firms in Nigeria

Determinants of Dividend Policy of Companies Listed in Dhaka Stock Exchange

This study intends to identify the determinants of corporate dividend policy followed in Bangladesh. The study uses a firm-level panel data set of 61 companies from eight major sectors of DSE for ten years from 2008 to 2017. Pearson correlation coefficient and backward elimination method of multiple regression have been used to find out the results of the study. Pearson correlation coefficient shows mixed results for the relationship between dividend per share and ownership structure, reserve & surplus, net asset value per share, earnings per share, dividend payout ratio and dividend yield. The findings of Backward Elimination Method of Multiple Regression show that ownership structure has positive impact on dividend per share in Financial Institutions sector. Reserve & surplus has positive impact on dividend per share in Banking and Pharmaceuticals & Chemicals sectors, but negative impact in Food & Allied Product sector. Net asset value has positive impact on dividend per share in Food & Allied Product, Textile and Insurance sectors, but negative impact in Banking sector. Earnings per share has positive impact on dividend per share in Engineering sector. Dividend payout ratio has positive impact on dividend per share in Fuel & Power and Insurance sector, but negative impact in Banking sector. Dividend yield has a positive impact on dividend per share in Banking, Financial Institutions, Engineering and Fuel & Power sector. Overall, ownership structure, reserve & surplus, net asset value per share, earnings per share, dividend payout ratio and dividend yield have significant impact on dividend per share of one or more of the selected sectors under study.