Deciphering the link: An empirical analysis of the interplay between economic value added and dividend payouts in the Indian corporate landscape

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This study delves into the dynamic interplay between economic value added (EVA) and dividend payout among listed firms in India. Leveraging data spanning from 2013 to 2019 for 564 Indian-listed companies, the study employs a fixed effect panel regression model to meticulously examine the intricate relationship between EVA and dividend payout. The findings decisively indicate a significant and positive correlation between the two, underscoring that an augmented EVA is associated with an elevated dividend payout ratio. Notably, a compelling insight emerges, revealing that a 100 percent surge in EVA corresponds to a noteworthy 5 percent upswing in firms’ dividend payouts. To fortify the robustness of these findings, the study employs the Generalized Method of Moments (GMM) methodology, corroborating the initial results. In essence, this paper solidifies the notion that heightened economic value added translates to increased dividend payments, providing valuable insights for both practitioners and researchers in the realm of corporate finance.

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    • Table 1. Few theories on dividend policy
    • Table 2. Description of variables
    • Table 3. Summary statistics of the samples
    • Table 4. Correlation analysis of the samples
    • Table 5. Panel regression results
    • Table 6. GMM regression model results
    • Conceptualization
      Rahul Kumar, Prince Bhatia
    • Data curation
      Rahul Kumar, Prince Bhatia
    • Formal Analysis
      Rahul Kumar, Prince Bhatia
    • Investigation
      Rahul Kumar, Prince Bhatia
    • Methodology
      Rahul Kumar, Prince Bhatia
    • Resources
      Rahul Kumar, Prince Bhatia
    • Software
      Rahul Kumar, Prince Bhatia
    • Supervision
      Rahul Kumar, Prince Bhatia
    • Validation
      Rahul Kumar
    • Visualization
      Rahul Kumar, Prince Bhatia
    • Writing – original draft
      Rahul Kumar, Prince Bhatia
    • Writing – review & editing
      Rahul Kumar