Determinants of Corporate Dividend Payout: In Case of Ethiopian Private Insurance Share Companies

Abstract

Corporate dividend policy has been a thing of concern to the financial manager and the firm at large. Despite many researches done the factors determining the dividend payout are still unsolved.  This research work tried to explore the determinant factors of corporate dividend payout in Ethiopian private insurance industry. In order to achieve the objective the researcher used mixed research approach and 12 years panel data was collected from seven private insurance companies for the years (2001-2012). Additionally interview with respective company managers was held. Last year’s dividend payout, growth in sales, earnings per share, size, return on asset, liquidity, leverage, age, investment opportunity and regulation are factors analyzed in this study. Fixed effect model is used to identify the most significant variable. The result of the study revealed that earning per share, liquidity, age of company in its life cycle and regulation on dividend taxation have positive and statistically significant relation with the dividend. In contrary to the hypothesized relation, remaining variables found to have insignificant relation with the dividend payout in Ethiopian private insurance industry.

Keywords: dividend payout, dividend policy, private insurance companies