Determinants of Dividend Payout Decisions: A Dynamic Panel Data Analysis of Turkish Stock Market

Abstract

This study analyzes the firm-specific factors affecting the dividend payout decisions of the companies whose shares are traded on the Borsa Istanbul stock exchange. To this end, the dynamic panel regression is applied to 853 observations of yearly average of 106 companies listed on the Borsa Istanbul between 2009 and 2015. According to results from the Arellano–Bover/Blunder-Bond two-step system generalized method of moments, a statistically significant positive effect on dividend payout was found in the relationship between the dividend payout of the previous year, the company’s return on equity and the market value/book value ratio, liquidity and the company’s size. The demonstration of a positive relationship between dividend payout and return on equity supports the free cash flow hypothesis and the positive relationship with the previous year’s dividend payout ratio supports the dividend smoothing hypothesis for Turkey.

Sectoral Analysis of Factors Influencing Dividend Policy: Case of an Emerging Financial Market

“…The analysis thus indicates that firms having a higher profitability in these sectors are likely to distribute higher dividends. These findings support Jensen (1986)'s free cash flow hypothesis, and are consistent with prior studies e.g., (Fama and French 2001;Benito and Young 2003;Aivazian et al 2003b;DeAngelo et al 2004;Mitton 2004;Reddy and Rath 2005;Baker et al 2007Baker et al , 2013Bostanci et al 2018). However, the profitability measure may differ for each sector.…”

The Influence of Factors Affecting Dividend Payout Ratio to Stock Price of Firms Listed in Indonesia Stock Exchange

“…As for the operating cash flow and marketto-book ratio, Rehman (2012) found a negative influence. Similar results were also found in a study produced by Bostanci et al (2018) on the stock exchange in Turkey, where the dividend payment per share last year, return on equity, market-to-book ratio, market capitalization, and liquidity had positive influence against the dividend payout, while the debt ratio, the company's age, and the insider shareholders, have not been statistically proven to impact dividend payout.…”

“…Positive results in regard to the current ratio of dividend-payout relationship against the company are shown by Rehman (2012). Gill et al (2010) and Bostanci et al (2018) found a positive relationship on a market-to-book value, but only in the manufacturing sector alone, and found a negative relationship in regard to the service sector. A positive relationship was also found in Istanbul in the panel data between 2009 and 2015 (Bostanci et al, 2018).…”

“…Gill et al (2010) and Bostanci et al (2018) found a positive relationship on a market-to-book value, but only in the manufacturing sector alone, and found a negative relationship in regard to the service sector. A positive relationship was also found in Istanbul in the panel data between 2009 and 2015 (Bostanci et al, 2018). Rehman (2012) states that as the proportions of internal funding (equity) increase over external funding (debt) in the debt-to-equity ratio, a company has more freedom to allocate profits on the dividend payment.…”

Effect of family control on corporate dividend policy of firms in Pakistan

“…The panel data analysis assists in investigating time-series as well as cross-sectional data simultaneously. Notably, Pindado, Requeio, and Torre (2012) and Bostanci et al, 2018) empirically prove that previous dividends affect current year dividends.…”