Dividend payout policies: Evidence from Latin America

Julian Benavides, Luis Berggrun and Hector Perafan

Finance Research Letters, 2016, vol. 17, issue C, 197-210

Abstract: This paper examines dividend payout policies for firms in six Latin American countries from 1995 to 2013. As predicted by the pecking order and trade-off models, the dividend payout is positively linked to profitability and negatively related to past indebtedness and investment opportunities. We also find that the target dividend payout ratio is positively related to governance indicators at the country level. In addition, the speed to which firms adjust their dividends to changes in earnings is lower in high governance countries in the region. Thus, firms smooth dividends more in countries with higher governance scores. We do not find evidence supporting the lifecycle theory nor illiquidity effects on dividends levels.

Keywords: Dividends; Pecking order model; Trade-off model; Lifecycle theory of dividends; Latin America (search for similar items in EconPapers)
JEL-codes: C33 C34 G32 G35 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:17:y:2016:i:c:p:197-210

DOI: 10.1016/j.frl.2016.03.012

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