The effects of firm specific variables on dividend decisions of Philippine listed firms from 2005 to 2007

• Main Authors: Cheng, Andrea Therese, Cu, Darlene Cindy, Ong, Maria Beatrice, Ong, Rachel Marie
• Format: text
• Language: English
• Published: Animo Repository 2007
• Subjects: Corporations > Finance; Dividends > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/6814
• Institution: De La Salle University

The relevance of dividend policies has been subject to debate for many years with inconclusive results. Miller and Modigliani have hypothesized the irrelevance of dividend policies given a perfect capital market however, the existence of an imperfect capital market closer approximates reality. Likewise, the Philippines has an imperfect capital market. We recognize that dividend polices are not irrelevant given the existence of an imperfect capital market. As such, there is a greater need to determine which factors influence corporate dividend decisions. Implementing the general-to-specific approach or model selection, we use the random effects probit estimation method to see whether firm size, profitability, degree of financial leverage, firm growth and investment opportunities, and agency cost variables have significant effects on the probability of issuing dividends. Our results show that the agency cost variable proxied by insider ownership has a positive relationship with the probability of issuing dividends. Similarly, firm size and profitability are also positive determinants of dividend decisions, while, in contrast the firm financial leverage has a negative effect on the Philippine corporate dividend decision.