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Fixing a payout ratio by dividend policies: a case of the utility sector

Author

Listed:
  • Marek Vochozka

    (Institute of Technology and Business in České Budějovice, Czech Republic)

  • Veronika Machová

    (Institute of Technology and Business in České Budějovice, Czech Republic)

  • Eliška Sedmíková

    (Institute of Technology and Business in České Budějovice, Czech Republic)

Abstract

The dividend policy presents an important tool to decide whether to pay or with hold the earning. The resolute information about purchasing shares and subsequent dividends show the future prosperity of the company and its position on the market. The article aims at analysing the development of the payout ratio estimated from the current dividend policy of ČEZ Company. CEZ is one of the most important suppliers and producers of electricity in the Czech Republic. The majority owner of the company is the Czech state. It can be stated that the area of operation does not only cover the Czech market, because ČEZ company also operates in other countries, mainly in Central Europe. For this reason, it is very interesting to watch the development of this power giant in terms his dominant role in a small and open economy such as the Czech Republic. The data extraction from company annual reports of 2008-2018 allows the correlation analysis to collect and interpret data on the payout ratio adequacy, examining the actual state of the company, earning distribution and corporate expectations from the market. The earning has a visibly positive impact on the payout ratio. The article offers advice for the organization changes to generalize achieved results, subsequently passing on advice for the whole segment.

Suggested Citation

  • Marek Vochozka & Veronika Machová & Eliška Sedmíková, 2021. "Fixing a payout ratio by dividend policies: a case of the utility sector," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 9(2), pages 416-432, December.
    • Handle: RePEc:ssi:jouesi:v:9:y:2021:i:2:p:416-432
    DOI: 10.9770/jesi.2021.9.2(27)
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    References listed on IDEAS

    as
    1. Ye, Dezhu & Deng, Jie & Liu, Yi & Szewczyk, Samuel H. & Chen, Xiao, 2019. "Does board gender diversity increase dividend payouts? Analysis of global evidence," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 1-26.
    2. von Eije, Henk & Goyal, Abhinav & Muckley, Cal B., 2017. "Flexible firm-level dividends in Latin America," Finance Research Letters, Elsevier, vol. 23(C), pages 133-136.
    3. Helmut Herwartz & Malte Rengel & Fang Xu, 2016. "Local Trends in Price‐to‐Dividend Ratios—Assessment, Predictive Value, and Determinants," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(8), pages 1655-1690, December.
    4. Wu, Tao & Kung, Chih-Chun, 2020. "Carbon emissions, technology upgradation and financing risk of the green supply chain competition," Technological Forecasting and Social Change, Elsevier, vol. 152(C).
    5. Rose, Adam & Wei, Dan, 2020. "Impacts of the Property Assessed Clean Energy (PACE) program on the economy of California," Energy Policy, Elsevier, vol. 137(C).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    payout ratio; dividends; dividend policy; funding; earning;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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