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Dividend payout policies: Evidence from Latin America

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  • Benavides, Julian
  • Berggrun, Luis
  • Perafan, Hector

Abstract

This paper examines dividend payout policies for firms in six Latin American countries from 1995 to 2013. As predicted by the pecking order and trade-off models, the dividend payout is positively linked to profitability and negatively related to past indebtedness and investment opportunities. We also find that the target dividend payout ratio is positively related to governance indicators at the country level. In addition, the speed to which firms adjust their dividends to changes in earnings is lower in high governance countries in the region. Thus, firms smooth dividends more in countries with higher governance scores. We do not find evidence supporting the lifecycle theory nor illiquidity effects on dividends levels.

Suggested Citation

  • Benavides, Julian & Berggrun, Luis & Perafan, Hector, 2016. "Dividend payout policies: Evidence from Latin America," Finance Research Letters, Elsevier, vol. 17(C), pages 197-210.
    • Handle: RePEc:eee:finlet:v:17:y:2016:i:c:p:197-210
    DOI: 10.1016/j.frl.2016.03.012
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    7. Rój Justyna, 2019. "The Determinants of Corporate Dividend Policy in Poland," Ekonomika (Economics), Sciendo, vol. 98(1), pages 96-110, June.
    8. Nor Anis Shafai & Annuar Md. Nassir & Fakarudin Kamarudin & Norhuda Abdul Rahim & Nor Hayati Ahmad, 2019. "Dynamic Panel Model of Dividend Policies: Malaysian Perspective," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 13(3), September.
    9. Kilincarslan, Erhan, 2021. "Smoothed or not smoothed: The impact of the 2008 global financial crisis on dividend stability in the UK," Finance Research Letters, Elsevier, vol. 38(C).
    10. Nor Anis Shafai, 2023. "Different Market Segmentations of Dividend Policies: A Dynamic Panel Data Analysis," GATR Journals afr222, Global Academy of Training and Research (GATR) Enterprise.
    11. Meneses Cerón, Luis Ángel & Carabalí Mosquera, Jaime Andrés & Pérez Pacheco, Camilo Andrés, 2021. "La relación entre el gobierno corporativo y la valoración, apalancamiento y desempeño financiero en Colombia || The relationship between corporate governance, valuation, leverage and financial perform," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 32(1), pages 324-340, December.
    12. Booth, Laurence & Zhou, Jun, 2017. "Dividend policy: A selective review of results from around the world," Global Finance Journal, Elsevier, vol. 34(C), pages 1-15.
    13. Braun, Matías & Rubio, Germán & Tigero, Tamara, 2023. "Payout policy around the world," International Review of Financial Analysis, Elsevier, vol. 89(C).
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    More about this item

    Keywords

    Dividends; Pecking order model; Trade-off model; Lifecycle theory of dividends; Latin America;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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