Determinants of dividend payout of Indian manufacturing companies

Abstract

Purpose The purpose of this study is to examine the influence of firm characteristics such as profitability, growth opportunities, size, leverage and maturity on dividend policy of Indian firms. Design/methodology/approach The study analyzes the determinants of dividend policy of manufacturing firms in India using panel data. Because of the non-linearity behaviour of dividend pay-out by firms, the study uses quantile regression method to examine whether the determinants of dividends vary depending on the company’s level of dividends. Findings Overall, the results show important difference between ordinary least square and quantile regression estimates and depict differential effect on dividend at different levels. The notable difference occurs because either the significance changes (e.g. for profitability and growth opportunities) or because the magnitude of coefficients changes (e.g. for size, profitability and growth opportunities). Originality/value This finding is useful in identifying the dividend issuing companies. Further, results of this study would be helpful to the mangers to manage their financial positions that subsequently help in retaining and attracting the probable investors.

Dividend Policy on IPOs Companies in Indonesia: A Life Cycle Theory Test

“…Thus, companies with greater ROA have higher propensity to pay dividends, which is 86.1973 times higher than those with smaller ROA. It is in accordance with the results of Kannadhasan et al [47], Thakur & Kannadhasan [48], and Baker & Kilincarslan [2] which prove that companies with greater profitability have higher propensity to pay dividends.…”

“…Referring to the 0.05 significance level, it can be concluded that there is strong empirical evidence to accept hypothesis 2.2. It is in accordance with the results of Thakur & Kannadhasan [48] and dan Baker & Kilincarslan [2]; (3) the estimated value of AGE variable coefficients toward DPR is -0.8531, the standard error value is 1.9759, and the probability is 0.6669. Thus, it can be concluded that hypothesis 3.2 is rejected.…”

The Determinants of Dividend Policy: An Empirical Study of Inconsistent Distribution of Dividends Using Balanced Panel Data Analysis

“…Dividend policy is refers to as the net income of the company distributed to shareholders (Thakur & Kannadhasan, 2018). This distribution is one of the attractions for the company to get funds while selling the issued shares (Tahir & Mushtaq, 2016).…”

“…The study of Al-Ajmi & Hussain (2011); Alzomaia & Al-Khadhiri (2013); Lestari (2018); Patra et al (2012); Ranajee et al (2018); Rehman (2012); Singla & Samanta (2018); Thakur & Kannadhasan (2018); and Yusof & Ismail (2016) showed that profitability positively affect dividend policy. Based on what has been described, the first hypothesis is formulated as follows: H 1 : Profitability positively affect dividend policy.…”

“…According to dividend signaling theory, the information asymmetry between a company's management regarding operations and its future prospects make shareholders to depend on distributed dividends. The signal given has a dividend distribute, which acts as a positive signal for the company's good business prospects (Dewasiri et al, 2019;Thakur & Kannadhasan, 2018).…”