Determinants of Dividend Policy: Evidence From Non-Financial Firms Listed With Dhaka Stock Exchange
Journal Title: IOSR Journal of Economics and Finance (IOSR-JEF) - Year 2018, Vol 9, Issue 5
Abstract
Dividend policy is one of the most significant issues in modern corporate finance. The focus of this report is to study the determinants of dividend payout for listed non-financial firms of DSE (Dhaka Stock Exchange), an emerging market in South Asia. In order to understand the dividend policy of non-financial firms in Bangladesh, this report has examined the influence of liquidity, leverage, profitability, growth, size and historical dividend on the dividend payout ratio of firms. The predictor variables include profitability, size of the firm, liquidity, growth opportunity, leverage, firm’s risk and previous year’s dividend. This report has explained each determinant supporting the literature review. Then empirical analysis has been conducted including descriptive statistics, pooled OLS regression model, fixed effect and random effect model. In additions, multicollinearity Test, Pearson Correlation Test, Homoscedasticity test, Jarque Berra Test and Shapiro-Wilk Test have been conducted to ensure the normality of dataset. Then this study has conducted Hausman Test to evaluate whether fixed effect model or random effect model can provide better result in the given data set. In hausman test, the chi square value is 31.07 and the probability value is very low, only 0.0001 which is less than 5 percent. So fixed effect model is the appropriate model to explain the outcome according to hausman test. Empirical results show that the dividend payout policies are positively affected by the firm size, liquidity, growth, firm’s risk and previous year’s dividends, but are negatively affected by the financial leverage and profitability. The results are statistically significant for only three variables named size, firm’s risk and previous year’s dividends which are also positively associated with dividend payout ratios.
Authors and Affiliations
Sifat Sadia
Keywords
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- EP ID EP414950
- DOI 10.9790/5933-0905033947.
- Views 230
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