Dividend Policy
International Research Journal of Finance and Economics ISSN 1450-2887 Issue 80 (2011) © EuroJournals Publishing, Inc. 2011 http://www.internationalresearchjournaloffinanceandeconomics.com
An Empirical Study on the Determinants of Dividend Policy in the UK
Badar Khalid Al Shabibi Faculty, Accounting & Finance, Department of Business Studies Ibra College of Technology, Sultanate of Oman E-mail: baderkh14@hotmail.com Tel: +968-95142254; Fax: +968-25587950 G Ramesh Faculty, Accounting & Finance, Department of Business Studies Ibra College of Technology, Sultanate of Oman E-mail: drrameshg@gmail.com Tel: +968-96149365; Fax: +968-25587950 Abstract This research aims to examine the factors which affect dividend policy for nonfinancial UK companies in the year 2007. In particular, the research examines the extent to which corporate governance factors affect corporate dividend policy. The factors are classified into two parts which are corporate governance factors and firm characteristics. Corporate governance factors include board size, board independence and audit type. On the other hand, firm characteristics are firm size, profitability, debt level, growth, risk, industry type and tangibility. The sources used to collect the data for this study are the Forecasting Analysis and Modelling Environment (FAME) database and annual reports. Multiple regression model is used to analyze the data. Based on the sample of 90 nonfinancial UK companies, it is found that corporate governance factors do affect the dividend policy. It seems that board independence is one of the important factors which drive firms to pay dividends. Furthermore, some of the firm characteristics have also influenced the dividend policy decision among the non-financial UK firms.
Keywords: Dividend Policy, Dividend Decision, Payout Policy, Payout Decision, Determinants of Dividend, Dividend Factors JEL Classification Code: G35
Introduction
There is a continuous debate about what drives companies
An Empirical Study on the Determinants of Dividend Policy in the UK
Badar Khalid Al Shabibi Faculty, Accounting & Finance, Department of Business Studies Ibra College of Technology, Sultanate of Oman E-mail: baderkh14@hotmail.com Tel: +968-95142254; Fax: +968-25587950 G Ramesh Faculty, Accounting & Finance, Department of Business Studies Ibra College of Technology, Sultanate of Oman E-mail: drrameshg@gmail.com Tel: +968-96149365; Fax: +968-25587950 Abstract This research aims to examine the factors which affect dividend policy for nonfinancial UK companies in the year 2007. In particular, the research examines the extent to which corporate governance factors affect corporate dividend policy. The factors are classified into two parts which are corporate governance factors and firm characteristics. Corporate governance factors include board size, board independence and audit type. On the other hand, firm characteristics are firm size, profitability, debt level, growth, risk, industry type and tangibility. The sources used to collect the data for this study are the Forecasting Analysis and Modelling Environment (FAME) database and annual reports. Multiple regression model is used to analyze the data. Based on the sample of 90 nonfinancial UK companies, it is found that corporate governance factors do affect the dividend policy. It seems that board independence is one of the important factors which drive firms to pay dividends. Furthermore, some of the firm characteristics have also influenced the dividend policy decision among the non-financial UK firms.
Keywords: Dividend Policy, Dividend Decision, Payout Policy, Payout Decision, Determinants of Dividend, Dividend Factors JEL Classification Code: G35
Introduction
There is a continuous debate about what drives companies