Determinants of Dividend Payout Ratio in Thailand

Abstract

Dividend payout ratio has been a controversial topic among scholars for some decades. Researchers have different conclusion and attempt to construct theoretical models to defy factors that impact dividend payout ratio such as transaction theory or agency theory for examples. The purpose of this study is to investigate some financial indicators that affect the dividend payout ratio in Thailand's capital market. From existing literature reviews, we select seven factors including dividend payout ratio a previous year, corporate size, current ratio, debt to equity ratio, sale growth, free cash flow and return on equity or return on assets. This study uses secondary data collected from annual financial statements of listed companies in Thailand Stock Exchange exclude financial sector during 2014 -2016 periods. After we evaluate the data based on specific criteria, only 106 companies remained qualified. Therefore 318 firm-year financial information has applied for this study. A panel multiple regression model is implemented for statistic testing at the significant level 0.05. The results show the positive and statistically significant effect of current ratio, debt ratio and return on equity to dividend payout ratio. While the results show negative and statistically significance of sales growth to dividend payout ratio. The results are consistent with prior survey except for debt ratio which shows the opposite direction. However, the results show no significant effect of dividend payout ratio a previous year, firm size and free cash flow to dividend payout ratio. Nevertheless, return on assets is better explanation than return on equity since the result demonstrates higher r square. This research limits determinants from previous literatures. Other explanatory variables such as investment opportunities, business risk or firm life cycle are subject to future research.

Impact of financial distress on the dividend policy of banks in India: evidence using panel data

“…Based on the research undertaken by Aivazian et al [8] and Amidu & Abor [13], there is a negative association between dividend distribution and financial distress. Venkatesh et al [60] proposed that the disbursement of dividends can potentially worsen a corporation's financial challenges. Furthermore, Malombe [37] examined the influence of dividends on the profitability of Kenyan enterprises and discovered a negligible but positive correlation between dividend policy and a firm's value.…”

“…However, the influence of financial distress on dividend policy varies among different institutions. Previous research has examined the relationship between financial distress and dividend policy and has predominantly found a negative or inverse association between these two variables [62,26,56,60,20]. However, even after being studied by different researchers, the association between distress and dividend needs a fresh perspective.…”