Determinants of Dividend Pay out Ratio

 Essay about Determinants of Dividend Payment Ratio

Determinants of Dividend Payout-Ratio: A Study of Philippine Stock Exchange-Listed Banks, 2007-2011

Intro

Dividend plan is one of the many controversial subject matter in finance literature but still `management constantly ponders about the gross payment and also why shareholders need to pay attention on gross. It is also a corporate profit that is paid out or considered as an income by the organization to be sent out to its shareholders as being a reward pertaining to investing. It is also considered as the sharing of recognized resources among investors that could either be paid out by the corporation or known as out by simply shareholders whenever. However , it is not necessarily a business expense for the corporation. Thus, the rules and recommendations used by the corporation to decide on how much dividend paid for to their shareholders are according to the corporation's income. This is referenced as corporate and business dividend policy. TheВ PhilippinesВ has an extensive banking system encompassing various types of banking institutions, from largeВ universal banksВ to smallВ rural banksВ and evenВ non-banks. There are twenty-two banks or financial institutions which might be listed in the Philippine Stock market, 3 which are Govt owned and 14 of which are Private-owned. As of Mar 31, 2011, there are 19 universal banking institutions, 19В commercial banking companies, 73В thrift banking companies, 595 non-urban banks, 40В credit unionsВ and 15 nonbanks with quasi-banking functions, all qualified with theВ Bangko Sentral ng Pilipinas (Central Bank in the Philippines) underВ Republic ActВ No. 8791, also known as the overall Banking Act of 2k. Previous empirical studies possess focused mainly on developed economies. This study discusses the issue coming from emerging market segments perspective by focusing specifically on Philippines' Bank Sector.

Difficulty Statement

" There are many studies done dedicated to dividend insurance plan for many countries but the real motivation of dividend decision still is still unsolved in corporate fund and confused the researchers and corporate managers for many years” (Baker & Powell, 1999). Most of the researches and research prior to empirical studies on the determinants of dividend payment ratio have been conducted mainly on U. S. businesses. And according to Chay and Suh (2005), firms outside the U. S. will be operating under different financial and legal environments and therefore may demonstrate a different pair of behavior within their financial actions. Therefore , examining dividend policies of companies outside the U. S. offer more information for us in the factors that influence company financial decision. As stated simply by Chay and Suh, different countries have different cultures, rules restricted on the dividend insurance plan and are also exercising different procedures. As a growing country, Philippines' still shortage the research that investigated for the leading determinants of the gross policy. Thus, the main reason for this study is to understand and to figure out the factors selected impact dividend payout-ratio in the Philippines' bank sector.

Objectives in the Study

1 . Identify whether or not the business selected parameters affect gross payout rate. 2 . Assess and discover the most important variable intended for the banks. 3. Find out if this examine has the same results to the other related studies.

Limitation from the Study

This kind of study is limited only in the Philippines plus the selected banking institutions that are classified by the Filipino Stocks Exchange. There are 7 out of 11 banking institutions considered within this study and these are the banks that gave away dividends from your years 2007-2011. And so far, no work has been required for the Korea on the determinants of gross pay-out percentage. So we have a dearth of literature through this field.

Relevance of the Study

The significance of the study is to find out about how corporate administrator should decide around the dividend policy and what should be considered prior to they make any kind of decision. Requirements dividend plan is very important seeing that a high and regular...

Recommendations: 1 . Aivazian, V., Sales space, l. and Cleary, H., (2003). Do Emerging Market Firms Comply with Different Dividend Policies By U. S i9000. Firms? Diary of Financial Exploration, 26(3), pp. 371-387

2 . Anil, T., and Kapoor, S., (2008), " Determinants of Gross Payout Ratios-A Study of Indian I . t Sector”, Worldwide Research Log of Finance and Economics, EuroJournals Publishing, Inc.

3. Amidu, Mohammed and Abor, Joshua. (22 03 2006) ‘Determinants of Dividend Payout Ratios in Ghana', Journal of Risk Finance, Vol 7.

4. Baker, H., & Powell, G. (2000, Spring/Summer2000). Determinants of Corporate Dividend Policy: A Survey of NYSE Firms. Financial Practice & Education, 10(1), 29-40.

5. Gill. A., Biger, N., & Tibrewala, 3rd there’s r. (2010). Determinants of Gross Payout Percentages: Evidence by United States. The Open Organization journal, several, 8-13.

six. Hedensted, L., & Raaballe, J. (2008). Dividend Determinants in Denmark. School of Economics and Management Aarhus: University of Aarhus.

six. Holder, Meters. E., Langrehr, F. W., @ Hexter, L. L. (1998). Dividend Policy Determinants: an investigation with the influence of stakeholder theory. Journal from the Financial Management, 27 (3), 73-83.

almost eight. Jinho Jeong. (2008). An Investigation of Powerful Dividend Behavior in Korea, Division of Organization Administration, Korea University Operating Paper.

being unfaithful. Lintner, David, (1956), " Distribution of Incomes of Corporations Among Dividends, Maintained Earnings and Taxes, " American Economics Review 46 (No. a couple of, May), 97-1 13.

15. Pruitt SW, Gitman LW. The relationships between the purchase, financing, and dividend decisions of key US companies. Finance Add some opuch 1991; 26: 409-30.

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