Determinants of Dividend Payout Ratios: Evidence from United States~!2010-01-07~!2010-04-06~!2010-05-12~!

Abstract

The paper seeks to extend Amidu and Abor [1] and Anil and Kapoor [2] findings regarding the determinants of dividend payout ratios by examining the same for the American service and manufacturing firms. We find that for the entire sample the dividend payout ratio is the function of profit margin, sales growth, debt-to-equity ratio, and tax. For firms in the Services industry the dividend payout ratio is the function of profit margin, sales growth, and debt-to-equity ratio. For manufacturing firms we find that dividend payout ratio is the function of profit margin, tax, and market-to-book ratio. We also found that the results are different when the dividend payout ratio is defined as the ratio between the cash dividend that the after-tax cash flow, not the after tax earnings of the companies.

Determinants of Corporate Dividends Policy: Evidence from an Emerging Economy

“…Several previous studies used profit to explain corporate dividend policy (see for example: Jensen et al, 1992;Han et al, 1999;Adaoğlu, 2000;Fama & French, 2000;Wang et al, 2002;Nnadi & Akpomi, 2008;Al-Kawari, 2009;Kouki & Guizani, 2009;Franklin & Muthusamy, 2010;Gill et al, 2010;Al-Shubiri, 2011;Subramaniam et al, 2011, Kim et al, 2013Salehnezhad, 2013;Movalia & Vekariya, 2014). It is not necessary, however, for the company to pay dividends only when they achieve high levels of profit.…”

“…They tend to increase their dividend payout in order to develop or maintain their reputation and assure shareholders. The relationship between dividend payout and corporate growth has been examined by several researchers (see for example: Rozeff, 1982;Myers & Majluf, 1984;Lloyd et al, 1985;Titman & Wessels, 1988;Lang & Litzinberger, 1989;Murrali & Welch, 1989;Jensen et al, 1992 ;Alli et al, 1993;Holder et al, 1998;D'Souza, 1999;Manos, 2002;Gadhoum, 2000;La Porta et al, 2000;Al-Kawari, 2009;Kouki & Guizani, 2009;Franklin & Muthusamy, 2010;Gill et al, 2010;Al-Shubiri, 2011;Kim et al, 2013;Movalia & Vekariya, 2014;Baah et al, 2014). However, the strength and the direction of the relationship between corporate growth and its dividend policy is not clear.…”

“…The relationship between industry type and dividend policy has been empirically investigated in several studies (see for example: Bowen et al, 1982;Bradley et al, 1984;Kester, 1986;Baker, 1988;Harris & Raviv, 1991;Dempsey et al, 1993;Richardson et al, 2002;Gill et al, 2010;Al Shabibi & Ramesh, 2011, Subramaniam et al, 2011Sarwar & Naseem, 2014). Empirical evidence of the direction of the relationship between industry type and dividend policy is inconsistent.…”

Empirical Evidences Regarding Correlation between Dividend Policy and the Performance of Companies Listed on the Bucharest Stock Exchange

“…This helps determine the company's capacity to pay dividends. Gill, Biger and Tibrewala (2010) in their US study on capital market concluded that the relationship between cash flow and dividend distribution policy is insignificant. Studies such as those belonging to Jensen (1986), Holder et al (1998) showed that companies that have larger free cash flow should distribute bigger dividends to reduce agency costs.…”

Improving corporate performance by enhancing team dynamics at the board level

“…We find that board member characteristics are strong antecedents to board-level outcomes, which are significantly related to firm performance. Overall, we had a stronger than typical predictive model of corporate profitability (R 2 = 0.20) exceeding the most recent prevalent R 2 (ranging from 0.07 to 0.16) of other recent academic works using profitability as a dependent variable (Ali Shah, 2009;Gill et al, 2010;Gill and Obradovich, 2012). In addition, we observed fairly strong Squared Multiple Correlations (R 2 ) for TTP (0.70) and TP (0.44), presented in Table 7.…”