Financing discretionary payout via debt or equity – evidence from India

Hardeep Singh Mundi and Deepak Kumar

Macroeconomics and Finance in Emerging Market Economies, 2025, vol. 18, issue 1, 101-119

Abstract: This study explores the reliance of S&P BSE 500 firms on capital markets to finance their discretionary payouts (DCP). This study reports that dividend payouts are not disappearing in India. The financing of DCP shows that firms finance DCP mainly with debt and occasionally with equity. Firm characteristics, namely size, excess leverage, excess cash, market-to-book ratio, R&D (only for debt financing), managerial ownership, cash flows, and credit rating, influence financing of DCP with debt and equity issuance. Lastly, business cycle conditions influence debt-financed DCP. Overall, the study provides insights to practitioners and academicians on Indian firm's financing of payout policy.

Date: 2025
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DOI: 10.1080/17520843.2021.1983706

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