Determinants of dividend payout policy of some selected manufacturing firms listed on the Ghana Stock Exchange.

Abstract

Dividend payout has been a focus of debate in financial literature over the years. Academicians and researchers have developed many theoretical models describing the factors that managers should consider when making dividend policy decisions. This study seeks to empirically examine the factors that affect dividend payout policy among some selected manufacturing firms using linear panel data regression methods to evaluate the factors that determine the dividend payout policy covering the period 1997 – 2006. The results shows that dividend per share as per the fixed effects estimator is a negative function of prior year’s dividend and positively related to profitability and size of the firms. The other variables appeared to have insignificant impact on dividend payout policy. Therefore, firms should efficiently increase profitability in order to maintain dividend payment to their shareholders and should also improve their liquidity base to sustain dividend payment.

Key words: dividend policy, Ghana, profitability, Ghana Stock Exchange, biavarite model