Does financial distress impact the dividend payment of Indian firm?

Bhakti Agarwal (), Rahul Singh Gautam () and Shailesh Rastogi ()
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Bhakti Agarwal: Symbiosis International (Deemed University)
Rahul Singh Gautam: Symbiosis International (Deemed University)
Shailesh Rastogi: Symbiosis International (Deemed University)

Future Business Journal, 2024, vol. 10, issue 1, 1-16

Abstract: Abstract Purpose Unexpected circumstances, like distress or bankruptcy, might impact the time or amount of dividends delivered to investors. Therefore, in the current study, we have attempted to reveal the impact of financial distress (FD) on the dividend decisions of firms working in India. Methodology In this study, we looked at secondary data from 78 non-finance firms working in different sectors of the Indian economy that had been collected over five years (2016–2020). Panel data analysis (PDA) determines the relationship between the impact of FD and corporate dividend decisions. Findings FD has no significant influence on the enterprises' dividend decisions. The association between FD and dividend decisions has also been found to be strongly and positively impacted by one of the interaction variables, environmental, social, and governance. Limitation One study constraint is that researchers may choose to conduct their research in different industries or areas. Furthermore, researchers may choose to include other factors as interaction terms that they believe are relevant to the domains of FD or dividends. Implication They will be inspired to start effectively managing their finances and debts due to this education. Comprehending these dynamics can aid decision-makers in financial uncertainty and support long-term sustainable value creation for investors, management, and policymakers when making dividend decisions. Originality This scholarly work is novel because of the way its variables are combined, especially the way it looks at how four moderators—PBIT, ESG, LII, and debt ratio, interact with one another. To the best of our knowledge, this specific combination has not yet been studied in the literature, which emphasizes the originality of our research.

Keywords: Altman Zscore; Competition; Profitability; Static model; Dynamic model; Sustainability (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1186/s43093-024-00410-9

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