Revisiting Firm-Specific Determinants of Dividend Policy: Evidence from Turkey

This study investigates the effects of firm-specific factors on the dividend policies of Turkish publicly listed firms in the post-2003 period. The paper focuses on this period because, starting in fiscal year 2003, Turkish authorities and regulators implemented various major economic and structural reforms for market integration and made significant changes in the regulatory framework of cash dividend policy rules. We analyse a panel dataset of 264 firms traded on the Istanbul Stock Exchange (ISE) over the period 2003–2012. Our results reveal that profitability, debt, growth, firm age and firm size are the most important firm-specific characteristics determining cash dividend payment decisions of ISElisted firms. The findings, thus, suggest that more profitable, more mature and larger firms are more likely to pay dividends (and distribute higher dividends), whereas firms with higher growth (investment opportunities) and more debt are less likely to pay dividends (and distribute lower dividends) in the Turkish market. Overall, we detect that the firm-specific determinants that affect the corporate dividend policies of ISE firms do follow similar patterns of dividend policy factors in more developed economies after the implementation of major developments in the post-2003 period, and hence such reforms make Turkish firms comparable to their counterparts in developed markets in terms of dividend policy setting.