Dividend Behaviour of Indian Companies Under Monetary Policy Restrictions
AbstractIn this study we examine the dividend behaviour of Indian companies. We use GMM estimator, which is the most suitable methodology in a dynamic setting. Our results show that the Indian firms have lower target ratios and higher adjustment factors. The most significant result is that the restricted monetary policies have significant influence on the dividend behaviour of Indian firms, causing about 5-6 percent reduction in the payout ratios. The significance of macro economic policy variable suggest that monetary policy restrictions do have impact on cost of raising funds, and the information asymmetry between lenders and borrowers increases that forces companies to reduce their dividend payout.
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Bibliographic InfoPaper provided by Indian Institute of Management Ahmedabad, Research and Publication Department in its series IIMA Working Papers with number WP2004-05-07.
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- Bhat Ramesh & Pandey I M, . "Dividend Decision: A Study of Managers Perceptions," IIMA Working Papers WP1993-02-01_01158, Indian Institute of Management Ahmedabad, Research and Publication Department.
- Jasim Al-Ajmi & Hameeda Abo Hussain, 2011. "Corporate dividends decisions: evidence from Saudi Arabia," Journal of Risk Finance, Emerald Group Publishing, vol. 11(1), pages 41-56, January.
- Khamis Hamed Al-Yahyaee & Toan Pham & Terry Walter, 2010. "Dividend stability in a unique environment," Managerial Finance, Emerald Group Publishing, vol. 36(10), pages 903-916, October.
- Mohsin, Hasan M & Ashraf, Muhammad Shahzad, 2011. "Monetary policy restriction and dividend behavior of Pakistani firms: an empirical analysis," MPRA Paper 34052, University Library of Munich, Germany, revised Oct 2011.
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