IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/112134.html

Profitability and Leverage as Determinants of Dividend Policy: Evidence of Turkish Financial Firms

Author

Listed:
  • Abdullah, Hariem

Abstract

The purpose of this study is to investigate the impact of profitability and leverage ratios on the determination of dividend policy for Turkish financial firms listed on Borsa Istanbul. In order to do so, secondary longitudinal data were collected for the listed financial firms from the DataStream database over the period 2008-2020. The financial crisis of 2007-2008 has affected the sector undoubtedly. Thus, it is important to investigate how dividend policy behaves with debt level and level of profitability in the financial sector of developing countries after the well-known financial crisis. The research expects that both profitability and leverage have a significant correlation with the dividend payout ratio. Consistent to the findings of the majority of the prior empirical studies, the results of this study found that both profitability and leverage are negatively associated with dividend payout ratio.

Suggested Citation

  • Abdullah, Hariem, 2021. "Profitability and Leverage as Determinants of Dividend Policy: Evidence of Turkish Financial Firms," MPRA Paper 112134, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:112134
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/112134/1/MPRA_paper_112134.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Narman Kuzucu, 2015. "A Survey of Managerial Perspective on Corporate Dividend Policy," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 4(2), pages 01-19, April.
    2. Theophano Patra & Sunil Poshakwale & Kean Ow-Yong, 2012. "Determinants of corporate dividend policy in Greece," Applied Financial Economics, Taylor & Francis Journals, vol. 22(13), pages 1079-1087, July.
    3. Saeed, Abubakr & Sameer, Muhammad, 2017. "Impact of board gender diversity on dividend payments: Evidence from some emerging economies," International Business Review, Elsevier, vol. 26(6), pages 1100-1113.
    4. Abdullah, Hariem & Tursoy, Turgut, 2021. "Capital structure and firm performance: a panel causality test," MPRA Paper 105871, University Library of Munich, Germany.
    5. Samy Ben Naceur & Mohamed Goaied, 2002. "The relationship between dividend policy, financial structure, profitability and firm value," Applied Financial Economics, Taylor & Francis Journals, vol. 12(12), pages 843-849.
    6. Kuzucu, Narman, 2015. "A survey of managerial perspective on corporate dividend policy: evidence from Turkish listed firms," MPRA Paper 69801, University Library of Munich, Germany.
    7. Khan, Naimat U. & Shah Jehan, Qurat Ul Ain & Shah, Attaullah, 2017. "Impact of taxation on dividend policy: Evidence from Pakistan," Research in International Business and Finance, Elsevier, vol. 42(C), pages 365-375.
    8. Brunzell, Tor & Liljeblom, Eva & Löflund, Anders & Vaihekoski, Mika, 2014. "Dividend policy in Nordic listed firms," Global Finance Journal, Elsevier, vol. 25(2), pages 124-135.
    9. 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.
    10. Abdullah, Hariem & Aziz, Hemn, 2017. "Impact of Just-In-Time manufacturing on profit maximization," MPRA Paper 112365, University Library of Munich, Germany.
    11. Husam‐Aldin Nizar Al‐Malkawi, 2007. "Determinants of Corporate Dividend Policy in Jordan: An Application of the Tobit Model," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 23(2), pages 44-70, December.
    12. Mohammed Amidu & Joshua Abor, 2006. "Determinants of dividend payout ratios in Ghana," Journal of Risk Finance, Emerald Group Publishing, vol. 7(2), pages 136-145, March.
    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. Hariem Abdullah & Turgut Tursoy, 2021. "Capital structure and firm performance: evidence of Germany under IFRS adoption," Review of Managerial Science, Springer, vol. 15(2), pages 379-398, February.
    15. Myers, Stewart C, 1984. "The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-592, July.
    16. 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.
    17. C.N. Ozuomba & A.S. Anichebe & P.V.C. Okoye, 2016. "The effect of dividend policies on wealth maximization – a study of some selected plcs," Cogent Business & Management, Taylor & Francis Journals, vol. 3(1), pages 1226457-122, December.
    18. Danis, András & Rettl, Daniel A. & Whited, Toni M., 2014. "Refinancing, profitability, and capital structure," Journal of Financial Economics, Elsevier, vol. 114(3), pages 424-443.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ghafar, Safeen & Abdullah, Hariem & Haji Rasul, Van, 2021. "Bank profitability measurements and its determinants: an empirical study of commercial banks in Iraq," MPRA Paper 114697, University Library of Munich, Germany.
    2. Amanj Mohamed Ahmed & Deni Pandu Nugraha & István Hágen, 2023. "The Relationship between Capital Structure and Firm Performance: The Moderating Role of Agency Cost," Risks, MDPI, vol. 11(6), pages 1-17, June.
    3. Hariem Abdullah & Aliya Zhakanova Isiksal & Razha Rasul, 2023. "Dividend policy and firm value: evidence of financial firms from Borsa Istanbul under the IFRS adoption," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 23(1), pages 350-370, March.

    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. 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.
    2. Rakesh Kumar Sharma, 2021. "Factors influencing dividend decisions of Indian construction, housing and real estate companies: An empirical panel data analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5666-5683, October.
    3. Basharat Khan & Qiujun Zhao & Amjad Iqbal & Irfan Ullah & Shahab Aziz, 2022. "Internal Dynamics of Dividend Policy in East-Asia: A Comparative Study of Japan and South Korea," SAGE Open, , vol. 12(2), pages 21582440221, April.
    4. Kartal Demirg ne, 2015. "Determinants of Target Dividend Payout Ratio: A Panel Autoregressive Distributed Lag Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 418-426.
    5. Hussain Haroon & Md-Rus Rohani & Al-Jaifi Hamdan Amer & Hussain Rana Yassir, 2022. "Determinants of Corporate Pay-Out Policy and the Moderating Effects of Firm's Growth: Evidence from Pakistan," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 32(3), pages 65-101, September.
    6. Seyed Alireza Athari, 2021. "The effects of institutional settings and risks on bank dividend policy in an emerging market: Evidence from Tobit model," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4493-4515, July.
    7. Nishant B. Labhane & Jitendra Mahakud, 2016. "Determinants of Dividend Policy of Indian Companies," Paradigm, , vol. 20(1), pages 36-55, June.
    8. Stereńczak, Szymon & Kubiak, Jarosław, 2022. "Dividend policy and stock liquidity: Lessons from Central and Eastern Europe," Research in International Business and Finance, Elsevier, vol. 62(C).
    9. 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.
    10. Sunaina Kanojia & Bunny Singh Bhatia, 2022. "Corporate governance and dividend policy of the US and Indian companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(4), pages 1339-1373, December.
    11. 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.
    12. 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.
    13. 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.
    14. 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.
    15. Islam Mohammad Shahidul & Adnan Atm, 2019. "Dividend Practices in Listed Companies: Study on the Manufacturing Sector of Bangladesh," Management of Organizations: Systematic Research, Sciendo, vol. 81(1), pages 1-19, June.
    16. Vu Quang Trinh & Ngan Duong Cao & Linh Hai Dinh & Hong Ngoc Nguyen, 2021. "Boardroom gender diversity and dividend payout strategies: Effects of mergers deals," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 6014-6035, October.
    17. Zakayo S. Kisava & Fredynandy M. John, 2017. "Determinants of Dividends Payout and Policy Used In Emerging Economies: Evidence from Turkey," Business and Economic Research, Macrothink Institute, vol. 7(2), pages 362-374, December.
    18. Odunayo Magret Olarewaju & Mabutho Sibanda & Stephen Oseko Migiro, 2017. "Dynamics of Lintner’s Model in the Dividend Payment Process of Nigerian Banks," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 67(3), pages 79-94, july-Sept.
    19. Dang-Khoa Duong & Thi Thanh-Phuong Phan & Kim-Hung Pho & Michael McAleer, 2020. "Impact of Board Characteristics and State Ownership on Dividend Policy in Vietnam," Advances in Decision Sciences, Asia University, Taiwan, vol. 24(4), pages 1-34, December.
    20. Martina Sopta Mihaela Mikić Tin Horvatinović, 2019. "Dividend Policies and Business Groups: the Case of Croatia," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 22(SCI), pages 25-36, March.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:pra:mprapa:112134. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.