Factors influencing dividend decisions of Indian construction, housing and real estate companies: An empirical panel data analysis

Abstract

This paper makes an attempt to identify the factors influencing dividend policy by analysing data of 125 companies enngaged in housing, construction and real estate business in India. These companies are selected which have paid dividend throughout the study period. Most of these companies are listed with either Bombay Stock Exchange or National Stock Exchange. This paper applies three alternative methods to verify and validate the results obtained from each other method. These methods are fully modified ordinary least squares (OLS), dynamic OLS and generalized methods of moments (GMM). Empirical findings of this research article depict that firm size, leverage and liquidity are significantly affecting dividend payout ratios and these variables have a negative relationship with the dividend payout ratio of the selected real estate firms. The results indicate that firm risk as measured through price–earnings ratio (P/E ratio) has a positive association with dividend payout ratio of selected real estate firms. Lagged dividend payout ratio used in the GMM test as an exogenous variable is showing positive significant association with dividend payout ratio. A firm's growth shows a negative relationship with dividend payout ratio using GMM technique. The present study shall be useful to different stakeholders of real estate companies. Various significant determinants as identified can be used by management for designing optimum dividend policy and providing maximum benefits to existing shareholders. Similarly existing as well as prospective shareholders may predict the future payment of dividend and accordingly they may take investment decisions in these firms, as the future fund's requirement of a firm depends upon dividend payment and retention ratio.

Study of the leading European construction companies using risk factor models

“…Regarding the construction sector, a recent study by Sharma (2021) examines the factors that may influence the dividend policy of stocks from housing, construction, and the real estate business in India. Piralanasih and Mustafa (2018) and Herwany et al (2021) examined the factors that may influence the stock returns of construction companies in the Indonesia Stock Exchange market.…”

“…In addition, the correlation between VOLD and TID is strong. Following some previous studies, such as Sevillano and Jareño et al (2018), Gonz alez and Jareño et al (2019), and Jareño et al (2020, 2021, we preserve the original risk factors without making transformations or applying any orthogonalisation process.…”

Dynamics of underwriting profits in the US market: Payout patterns and regulation effects

“…In addition, the DOLS (Stock & Watson, 1993) was also used in this study to check the robustness of the estimated results of the long-run coefficients in Equation ( 8). This method has the advantage of providing unbiased estimates for small samples (Sharma, 2021). Another DOLS advantage is that it could provide a robust correction to the possible presence of endogeneity in the explanatory variable (Afonso & Jalle, 2017).…”

COVID-19, Profitabilitas, dan Kebijakan Dividen: Uji Robustness untuk Model Mediasi Menggunakan SEM Berbasis Kovarian

“…Contrarily, companies adopt a positive dividend policy during crisis conditions (Damodaran, 2015;Sharma, 2021). This is because they tend to provide a positive signal to the market that their performance is good in times of crisis.…”