Dividend Payout-Policy Drivers: Evidence from Emerging Countries

Boțoc, Claudiu; Pirtea, Marilen

doi:10.2753/ree1540-496x5004s407

Cited by 41 publications

(40 citation statements)

References 29 publications

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“…The theoretical position manifested by Lintner (1956) reveals that dividends are paid out of profits; that is why it is impossible for an unprofitable company to pay dividends. Literature suggests several drivers of the corporate profitability, such as good corporate governance practices, (Ahmad 2015), high investor protection, (Boţoc and Pirtea 2014), close corporate monitoring by institutional shareholders, (Chang et al 2016;Jacob and Lukose 2018), regulatory consideration, (Kasozi and Ngwenya 2015), and minimum agency problem (Jacob and Michaely 2017). From these authors, one may deduce that companies with good corporate governance, sound regulatory support, high investor protection, strong corporate monitoring by institutional shareholders, and minimum agency problems are more profitable as compared to those companies with poor corporate governance practices, lower investor protection, weak corporate control by institutional shareholders, and having agency problems.…”

Section: Related Literature and Hypothesis Developmentmentioning

confidence: 99%

Towards Extending Dividend Puzzle Debate: What Motivates Distribution of Corporate Earnings in Tanzania?

Lotto

2020

IJFS

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This paper investigates the determinants of dividend policy in Tanzania. The study employed a panel data of non-financial firms listed on the Dar es Salaam Stock Exchange (DSE) for the period 2008–2017. The paper reports profitability, liquidity, firm size, leverage, firm growth, previous dividend, and GDP as the major determinants of corporate dividend policy. According to the results, leverage, firm growth, and GDP are negatively related to dividend payout ratio while firm size, profitability, liquidity, and lagged dividend are positively related to dividend policy. More specifically, large-sized firms, highly profitable firms, and firms who paid dividend in previous years are more likely to consider paying dividend. However, payment of dividend will all depend on whether the firm is liquid enough to afford that. On the other hand, high-growth and leveraged firms would not probably consider paying dividend, and will, therefore, opt saving money to finance their expansion and honor their debt obligations. Following these results, corporate managers are advised to consider preferences of investors towards developing corporate dividend policy; to strive paying dividend whenever economically viable (as it signals the firm’s reputation), and to limit excessive borrowing to protect firms from getting into financial meltdown (although borrowing is considered a control tool for agency-related problems).

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Section: Related Literature and Hypothesis Developmentmentioning

confidence: 99%

Towards Extending Dividend Puzzle Debate: What Motivates Distribution of Corporate Earnings in Tanzania?

Lotto

2020

IJFS

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“…Various measures of dividend pay-out ratio have been found in existing literature to include dividend yield, dividend-to-earnings ratio, and dividend-to-asset ratio. This paper adopts dividend-to-asset ratio in line with Aivazian et al (2003) and Botoc and Pirtea (2014) to avoid problems that may arise with pricing and volatile earnings when earnings are manipulated to paint a particular picture of the organization using some loopholes in accounting. The independent variables include profitability, firm size, business risk, financial leverage, and liquidity and growth opportunities…”

Section: Study Variablesmentioning

confidence: 99%

Factors Influencing Dividend Payout Policy of Firms Listed on the Nigerian Stock Exchange

Yusuf¹

2019

aeb

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Dividend policy decisions in the emerging markets has continued to receive attention lately in academic research due to the differences observed between developed and emerging markets and sparse empirical evidence in this area. This research is directed towards the emerging markets in Africa. It investigates dividend decision in 299 companies listed in Nigeria on Nigerian stock exchange market. This paper compares dividend decisions in the pre-crisis, crisis and post-crisis periods. Six possible determinants of dividend policy was analyzed using correlation and multiple regression analysis for a period of 13 years (2002 to 2014). The companies are segregated into active and dead groups for the purpose of the analysis. This paper contributes to the current body of knowledge by giving more insights to dividend policy in the largest economy in Africa taking account of the financial crisis of 2008. Liquidity and growth opportunities are common predictors in the three periods. Results are in support of agency, pecking order and signalling theories. The predictors in the regression model explains 42% variability in dividend policy before the crisis in Nigeria but about 20% during and afterwards.

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“…De Cesari (2012) examine the listed non-financial Italian companies and show that share of cash dividends in total payout (i.e., cash dividends plus repurchases) increases as the wedge between control and cash flow rights of the controlling shareholder widens. There is also empirical evidence that companies in emerging countries with weak investor protection have higher dividend payouts for enhancing reputation irrespective of the company risk (Botoc & Pirtea, 2014). Another study finds that as the stake of founding families increases, companies tend to have higher dividend payouts to create a reputation for the fair treatment of minority shareholders (Isakov & Weisskopf, 2015).…”

Section: The Reputation Building (Substitution) and The Outcome Hypotmentioning

confidence: 99%

“…Turkey is a civil law country, and it is characterised by a weak shareholder protection setting (Mitton, 2004;Botoc & Pirtea, 2014). In countries where shareholder protection is weak, minority shareholders are not powerful enough to extract dividends (La Porta et al, 2000).…”

Section: Turkish Business Settings and Hypothesesmentioning

confidence: 99%

Dividend Payouts: Majority Control and Rent Extraction

Besim

Adaoglu

2018

Journal of Business Economics and Management

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In Eurasia, Turkey has a “crony” capitalist system with majority control and business groups (BGs) in the hands of a few families. These business groups are often organised around a holding company. We analyse the dividend payouts of family controlled Borsa Istanbul companies, which are affiliated to holding and non-holding BGs. We investigate and quantify the effects of several control-enhancing mechanisms (CEMs) on dividend payouts. We use precise quantitative proxies for CEMs to measure the divergence between control and ownership rights. Supporting the rent extraction hypothesis, holding business group companies have lower dividend payouts as the divergence between control and ownership rights widens and the pyramid wedge increases. However, controlling foreign-family coalitions in holding business group companies curb the rent extraction problem by having a positive effect on the dividend payouts. Overall, for family controlled holding BG companies, the effects of company-specific financial control variables on dividend payouts are stronger than the effects of CEMs. For family controlled non-holding BG companies, there is no empirical support for either the rent extraction or the reputation building hypotheses. The company-specific financial control variables are the main determinants of dividend payouts for family controlled non-holding BG companies.

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Dividend Payout-Policy Drivers: Evidence from Emerging Countries

Cited by 41 publications

References 29 publications

Towards Extending Dividend Puzzle Debate: What Motivates Distribution of Corporate Earnings in Tanzania?

Towards Extending Dividend Puzzle Debate: What Motivates Distribution of Corporate Earnings in Tanzania?

Factors Influencing Dividend Payout Policy of Firms Listed on the Nigerian Stock Exchange

Dividend Payouts: Majority Control and Rent Extraction

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