Dividend Policy Explained by Country’s Standards of Living: An International Evidence

Hanaan Yaseen ()
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Hanaan Yaseen: The Bucharest University of Economic Studies

A chapter in Global Versus Local Perspectives on Finance and Accounting, 2019, pp 125-134 from Springer

Abstract: Abstract The purpose of the study is to investigate if there is any association between the standards of living within a country and the dividend payout ratio (DPR) of the companies activating in that country. Traditional corporate finance factors, analysed in the past literature in order to explain the dividend policy, can be insufficient when I try to explain decisions made within companies, which could be very much impacted by the feeling, emotions, needs and future plans of the shareholders. The decision regarding the dividend payments is made in the General Assembly of Shareholders. In this respect, I consider that there are also some other factors, in addition to the companies’ financial variables, which could influence this corporate decision. That is why I decided to examine if the population standards of living within a country may influence the dividend payout ratio. Using a large database, comprised of 10,878 companies from 56 countries, between 2008 and 2014, I find that quality of life influences significantly the decision to distribute higher share of net profits as dividends. Also, this study provides evidence that income inequality within a country influences positively the corporate decision to have higher dividend payout ratios.

Keywords: Dividend; Dividend policy; Life standards; Income inequality (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-11851-8_12

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DOI: 10.1007/978-3-030-11851-8_12

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