Dynamics of Dividend Payout in Korean Corporations: A Comprehensive Panel Analysis Across Economic Cycles

SungSup Brian Choi () and Kudzai Sauka
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SungSup Brian Choi: Department of Business Management, SUNY (State University of New York) Korea, 119-2 Songdo Moonhwa-Ro, Inchon 21985, Republic of Korea
Kudzai Sauka: Faculty of Business and Economics, Amsterdam University of Applied Sciences, Postbus 814, 1000 AV Amsterdam, The Netherlands

JRFM, 2024, vol. 17, issue 12, 1-13

Abstract: This research conducts a meticulous examination of the determinants influencing dividend payout dynamics among firms listed on the Korean Stock Exchange (KSE) from 1995 to 2021, a period characterized by profound economic fluctuations. By leveraging a dynamic panel data model and the Generalized Method of Moments (GMM) for estimation, the study addresses endogeneity concerns while exploring the effects of firm-specific and macroeconomic variables on dividend yields. The investigation delineates three distinct economic phases: normal conditions, financial crises, and the aggregate study period, facilitating a granular understanding of firms’ dividend payout adaptability under varying economic landscapes. Empirical findings underscore the persistence of dividend payments, revealing a variable adjustment speed toward target dividend yields contingent upon the economic context, with an expedited adjustment observed during crises. Crucially, firm profitability emerges as a consistent determinant of dividend yields across all examined periods, whereas the influence of macroeconomic variables is notably more pronounced during periods of economic normalcy. This research elucidates the complex interplay between internal corporate strategies and external economic pressures in shaping dividend policies, thereby enriching the discourse on dividend payout behavior in the context of Korea’s economic evolution from an emerging to a developed market.

Keywords: determinants of dividend policy; dynamic panel data model; system GMM; comparative study between normal and crisis periods (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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