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Does Social Progress Explain the Dividend Payout Decision?

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  • Hanaan Yaseen

Abstract

This paper investigates whether national social progress influences dividend payout policy of companies around the world. Using a large database of 12,312 companies from 70 countries, for 7 years (2008-2014), I provide strong evidence that social progress is significant in relation to important corporate decisions on paying dividends. Dividend payout policy is explained by the social progress of the country in which the company is active. Access to higher education, satisfaction of basic human needs, overall wellbeing and opportunities positively influence the dividend payout ratio and the propensity to pay dividends. Moreover, the Social Progress Index may be more significant than GDP per capita in relation to dividend policy. Hence, the new measure of quantifying the population's standard of living, from the social perspective and not from the economic one, is more relevant in the decision-making process on dividend payout.

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  • Hanaan Yaseen, 2021. "Does Social Progress Explain the Dividend Payout Decision?," Prague Economic Papers, Prague University of Economics and Business, vol. 2021(1), pages 90-114.
    • Handle: RePEc:prg:jnlpep:v:2021:y:2021:i:1:id:758:p:90-114
    DOI: 10.18267/j.pep.758
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    More about this item

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G40 - Financial Economics - - Behavioral Finance - - - General

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