Why do firms pay dividends : lifecycle theory in the Asian context.

• Main Authors: Chia, Li Yi., Chua, Mincong., Loke, Alvin Zhengqiang.
• Other Authors: Sawicki, Julia
• Format: Final Year Project
• Published: 2008
• Subjects: DRNTU::Business::Finance::Dividends
• Online Access: http://hdl.handle.net/10356/10448
• Institution: Nanyang Technological University

The determinants of dividend payout are consistent in Japan, Indonesia, Hong Kong, Korea, Singapore, Malaysia, Taiwan and Thailand. Profitability, growth opportunities, firm size and the earned equity mix all influence the likelihood of paying dividends. There exists a declining propensity to pay dividends in most countries with the exception of Korea and Taiwan. This declining propensity to pay may be attributed to the changing firm characteristics over the years, exhibiting characteristics of non-payers. Results from the descriptive statistics and logit regressions show that earned equity mix is the strongest determinant of dividend payout. From our findings, dividend payout is concentrated among the larger and more profitable firms. In addition, firms with the highest earnings are also the top payers. Overall, these findings provide support for the lifecycle theory.