Factors influencing dividend payout policy: Evidence from listed non-financial firms of the Zagreb Stock Exchange

Darija Prša (), Aljoša Šestanoviæ () and Ivo Ramljak ()
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Darija Prša: Narodne novine d.d., Zagreb, Croatia
Aljoša Šestanoviæ: EFFECTUS-Entrepreneurial Studies, Zagreb, Croatia
Ivo Ramljak: Narodne novine d.d., Zagreb, Croatia

Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, 2022, vol. 40, issue 2, 441-457

Abstract: This paper aims to assess the impact of financial factors on the dividend payout ratio, and the purpose is to research factors affecting dividend payout in less developed markets and compare them with the results of previous studies. We use the global research platform Screener.co, and the financial statements available on Zagreb Stock Exchange to collect the data. Our sample consists of companies listed on the Zagreb Stock Exchange that paid dividends at least once in the last three years. In the model applied, we covered five years (dividends paid from 2017 to 2021, based on financial fundamentals preceding dividends from 2016 to 2020) using hierarchical linear regression analysis that consists of four explanatory variables: return on equity, return on assets, financial leverage, and free cash flow to revenue. First, the research found high fluctuations in the dividend payout ratio and return on equity variability. Secondly, we found no statistically significant causality between the dividend payt ratio explanatory variables. The results suggest that other long-term non-financial factors, such as the investors’ expectations, history of paying dividends, and large cash reserves backed by high retained earnings, may have a decisive impact on the dividend payout ratio rather than recent financial factors.

Keywords: dividend policy; dividend payout; financial analysis; Zagreb Stock Exchange (search for similar items in EconPapers)
JEL-codes: G32 G35 O16 (search for similar items in EconPapers)
Date: 2022
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