IDEAS home Printed from https://ideas.repec.org/a/nrb/journl/v27y2015i2p4.html
   My bibliography  Save this article

Determinants of Corporate Dividend Payout in Nepal

Author

Listed:
  • Nabaraj Adhikari, Ph.D.

    (Nepal Rastra Bank)

Abstract

There are several studies that investigated determinants of corporate dividend payout in developed and emerging stock markets. Such a study is scant in pre-emerging stock markets like that of Nepal. Therefore, the purpose of this paper is to investigate the determinants of corporate dividend payout in Nepal. This paper examines whether enterprises’ characteristics affect dividend payouts of the enterprises listed on Nepal Stock Exchange Ltd. A priori hypothesis between relationship of the dividends paid by the enterprises and enterprises’ characteristics- net profits, size, lagged dividends, liquidity, risk, investment opportunity set, and number of shareholders are set based on theoretical framework and other empirical studies, and tested on 22 listed enterprises covering a 5-year period, 2009 to 2013 by employing regression model. Purposive sampling technique is used to select the enterprises for the study. The relationships of variables firstly analysed for overall sector and further for sub-sectors of financial and non-financial sector. Overall sector analysis is performed through pooled cross-sectional data. Further to check sectoral differences, sector wise regression analysis is performed. The results, in overall, reveal that profitability, size, and liquidity are major determinants of corporate dividend payout in Nepal. This study also reveals that there is sector specific importance of the determinants of corporate dividend payout in Nepal.

Suggested Citation

  • Nabaraj Adhikari, Ph.D., 2015. "Determinants of Corporate Dividend Payout in Nepal," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 27(2), pages 53-74, October.
    • Handle: RePEc:nrb:journl:v:27:y:2015:i:2:p:4
    as

    Download full text from publisher

    File URL: https://www.nrb.org.np/contents/uploads/2019/12/Vol27-2-art4.Determinants_of_Corporate_Nawaraj_Adhikari.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Uwuigbe Olubukunola Ranti, 2013. "Determinants Of Dividend Policy: A Study Of Selected Listed Firms In Nigeria," Manager Journal, Faculty of Business and Administration, University of Bucharest, vol. 17(1), pages 107-119, May.
    2. Kuo, Jing-Ming & Philip, Dennis & Zhang, Qingjing, 2013. "What drives the disappearing dividends phenomenon?," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3499-3514.
    3. Gustavo Grullon & Roni Michaely, 2002. "Dividends, Share Repurchases, and the Substitution Hypothesis," Journal of Finance, American Finance Association, vol. 57(4), pages 1649-1684, August.
    4. Oskar Kowalewski & Ivan Stetsyuk & Oleksandr Talavera, 2007. "Corporate Governance and Dividend Policy in Poland," Discussion Papers of DIW Berlin 702, DIW Berlin, German Institute for Economic Research.
    5. Fama, Eugene F, 1974. "The Empirical Relationships Between the Dividend and Investment Decisions of Firms," American Economic Review, American Economic Association, vol. 64(3), pages 304-318, June.
    6. Higgins, Robert C., 1972. "Dividend Policy and Increasing Discount Rates: A Clarification," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 7(3), pages 1757-1762, June.
    7. Jeffrey R. Brown & Nellie Liang & Scott Weisbenner, 2007. "Executive Financial Incentives and Payout Policy: Firm Responses to the 2003 Dividend Tax Cut," Journal of Finance, American Finance Association, vol. 62(4), pages 1935-1965, August.
    8. Dr. Faris Nasif AL- Shubiri, 2012. "Determinants Of Changes Dividend Behavior Policy: Evidence From The Amman Stock Exchange," Far East Journal of Marketing and Management, Far East Research Centre, vol. 2(1), pages 1-13, August.
    9. Pruitt, Stephen W & Gitman, Lawrence J, 1991. "The Interactions between the Investment, Financing, and Dividend Decisions of Major U.S. Firms," The Financial Review, Eastern Finance Association, vol. 26(3), pages 409-430, August.
    10. Baskin, Jonathan Barron, 1988. "The Development of Corporate Financial Markets in Britain and the United States, 1600–1914: Overcoming Asymmetric Information," Business History Review, Cambridge University Press, vol. 62(2), pages 199-237, July.
    11. Phoebus J. Dhrymes & Mordecai Kurz, 1967. "Investment, Dividend, and External Finance Behavior of Firms," NBER Chapters, in: Determinants of Investment Behavior, pages 427-485, National Bureau of Economic Research, Inc.
    12. Benartzi, Shlomo & Michaely, Roni & Thaler, Richard H, 1997. "Do Changes in Dividends Signal the Future or the Past?," Journal of Finance, American Finance Association, vol. 52(3), pages 1007-1034, July.
    13. Michael S. Rozeff, 1982. "Growth, Beta And Agency Costs As Determinants Of Dividend Payout Ratios," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 5(3), pages 249-259, September.
    14. Hananeh Shahteimoori Ardestani & Siti Zaleha Abdul Rasid & Rohaida Basiruddin & Mohammadghorban Mehri, 2013. "Dividend Payout Policy, Investment Opportunity Set and Corporate Financing in the Industrial Products Sector of Malaysia," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 3(1), pages 1-8.
    15. Varouj Aivazian & Laurence Booth & Sean Cleary, 2003. "Do Emerging Market Firms Follow Different Dividend Policies From U.S. Firms?," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 26(3), pages 371-387, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nabaraj Adhikari, Ph.D., 2015. "Determinants of Corporate Dividend Payout in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 27(2), pages 1-22, October.
    2. Darakhshan Younis & Attiya Yasmin Javid, 2014. "Market Imperfections and Dividend Policy Decisions of Manufacturing Sector of Pakistan," PIDE-Working Papers 2014:99, Pakistan Institute of Development Economics.
    3. Nishant B. Labhane & Jitendra Mahakud, 2016. "Determinants of Dividend Policy of Indian Companies," Paradigm, , vol. 20(1), pages 36-55, June.
    4. Abdullah AlGhazali & Khamis Hamed Al-Yahyaee & Richard Fairchild & Yilmaz Guney, 2024. "What do dividend changes reveal? Theory and evidence from a unique environment," Review of Quantitative Finance and Accounting, Springer, vol. 62(2), pages 499-552, February.
    5. Maria Elisabete Duante Neves, 2017. "Payout and Firm's Catering," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 104-132.
    6. Esqueda, Omar A., 2016. "Signaling, corporate governance, and the equilibrium dividend policy," The Quarterly Review of Economics and Finance, Elsevier, vol. 59(C), pages 186-199.
    7. repec:ers:journl:v:v:y:2017:i:4:p:104-132 is not listed on IDEAS
    8. Frankfurter, George M. & Wood, Bob Jr., 2002. "Dividend policy theories and their empirical tests," International Review of Financial Analysis, Elsevier, vol. 11(2), pages 111-138.
    9. Cheng-Few Lee & Woan-lih Liang & Fu-Lai Lin & Yating Yang, 2016. "Applications of simultaneous equations in finance research: methods and empirical results," Review of Quantitative Finance and Accounting, Springer, vol. 47(4), pages 943-971, November.
    10. Jabbouri, Imad, 2016. "Determinants of corporate dividend policy in emerging markets: Evidence from MENA stock markets," Research in International Business and Finance, Elsevier, vol. 37(C), pages 283-298.
    11. H.Kent Baker & Gary E. Powell & E.Theodore Veit, 2002. "Revisiting the dividend puzzle," Review of Financial Economics, John Wiley & Sons, vol. 11(4), pages 241-261.
    12. du Jardin, Philippe & Séverin, Eric, 2011. "Dividend policy," MPRA Paper 44382, University Library of Munich, Germany.
    13. James, Hui & Benson, Bradley W. & Wu, Chen (Ken), 2017. "Does CEO ownership affect payout policy? Evidence from using CEO scaled wealth-performance sensitivity," The Quarterly Review of Economics and Finance, Elsevier, vol. 65(C), pages 328-345.
    14. Schmid, Thomas & Ampenberger, Markus & Kaserer, Christoph & Achleitner, Ann-Kristin, 2010. "Controlling shareholders and payout policy: do founding families have a special 'taste for dividends'?," CEFS Working Paper Series 2010-01, Technische Universität München (TUM), Center for Entrepreneurial and Financial Studies (CEFS).
    15. Gugler, Klaus, 2003. "Corporate governance, dividend payout policy, and the interrelation between dividends, R&D, and capital investment," Journal of Banking & Finance, Elsevier, vol. 27(7), pages 1297-1321, July.
    16. Gyimah, Daniel & Gyapong, Ernest, 2021. "Managerial entrenchment and payout policy: A catering effect," International Review of Financial Analysis, Elsevier, vol. 73(C).
    17. ElBannan, Mona A., 2020. "Does catering behavior persist? Evidence on dividend sentiment in emerging financial markets," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 350-373.
    18. Md. Ariful Hoque, 2018. "Impulse of Dividend Payment Decision: Evidence from Pharmaceutical Industry in Bangladesh," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 9(1), pages 219-225, January.
    19. Adaoglu, Cahit, 2000. "Instability in the dividend policy of the Istanbul Stock Exchange (ISE) corporations: evidence from an emerging market," Emerging Markets Review, Elsevier, vol. 1(3), pages 252-270, November.
    20. Renneboog, L.D.R. & Trojanowski, G., 2005. "Patterns in Payout Policy and Payout Channel Choice of UK Firms in the 1990s," Discussion Paper 2005-002, Tilburg University, Tilburg Law and Economic Center.
    21. He, Wen & Ng, Lilian & Zaiats, Nataliya & Zhang, Bohui, 2017. "Dividend policy and earnings management across countries," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 267-286.

    More about this item

    Keywords

    Dividend payout; Net profits; Size; Liquidity; Nepal;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C87 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Econometric Software
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nrb:journl:v:27:y:2015:i:2:p:4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Publication Division NRB (email available below). General contact details of provider: https://edirc.repec.org/data/nrbgvnp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.