Exploring New Aspects of Corporate Dividend Policy: Case of an Emerging Nation

Biswajit Ghose, Pankaj Kumar Tyagi, Parikshit Sharma, Nivaj Gogoi (), Premendra Kumar Singh (), Yeshi Ngima, Asokan Vasudevan and Kiran Gope
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Biswajit Ghose: Department of Commerce, Tezpur University, Napaam 784028, Assam, India
Pankaj Kumar Tyagi: University Institute of Tourism and Hospitality Management, Chandigarh University, Mohali 140413, Punjab, India
Parikshit Sharma: Faculty of Management, Jagran Lakecity University, Bhopal 462044, Madhya Pradesh, India
Nivaj Gogoi: Department of Finance, Kaliabor College, Kaliabor 782137, Assam, India
Premendra Kumar Singh: Centre for Distance and Online Education, Sharda University, Greater Noida 201310, Uttar Pradesh, India
Yeshi Ngima: Department of Commerce, Tezpur University, Napaam 784028, Assam, India
Asokan Vasudevan: Faculty of Business and Communications, INTI International University, Nilai 71800, Malaysia
Kiran Gope: Department of Management, Mizoram University, Aizawl 796004, Mizoram, India

JRFM, 2025, vol. 18, issue 5, 1-20

Abstract: The present study focuses on how various firm characteristics influence their dividend payout policies. The study finds empirical evidence with regard to primarily two aspects of corporate dividend decisions—dividend increase and decrease, whose exploration is inadequate in the past literature. The random effect logistic regression has been considered in order to analyze the panel dataset from 2001–2002 to 2021–2022 including 3739 listed Indian firms. The empirical models are formatted based on the relevant dividend-related theories in the Indian context such as the residual theory, transaction cost theory, signalling theory, etc. Further, additional tests are conducted regarding the robustness of the reported results. The empirical results document that firm size, profitability, promoter holdings, cash holdings, and life cycle have a favourable influence on the propensity of both increasing and decreasing dividend payouts. In contrast, earnings volatility, leverage, and free cash flow reduce firms’ tendency to increase and decrease dividend payments. These results indicate that higher liquidity and ownership concentration provide firms with greater financial flexibility to adjust their dividend policies as per their prevailing opportunities. The findings of the study offer insightful information about how to arrange dividend policies with firm-specific traits which will be helpful for managers and investors to make better decisions.

Keywords: dividend policy; firm characteristics; dividend persistent; financial; economic; India (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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