Factors affecting the dividend policy of non-financial joint-stock companies in Ukraine
-
DOIhttp://dx.doi.org/10.21511/imfi.17(3).2020.04
-
Article InfoVolume 17 2020, Issue #3, pp. 40-53
- Cited by
- 1878 Views
-
314 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Dividend policy, as part of corporate governance, is largely dependent on the institutional environment in which companies operate. The study aims to determine factors affecting dividend policy in the conditions of the Ukrainian underdeveloped stock market, legal insecurity of minority shareholders, high cost and concentration of capital. For this purpose, hypotheses about the impact of a company’s financial state, size, business risk, and ownership structure on dividend payments were tested using a sample of 58 Ukrainian non-financial public joint-stock companies and applying Interactive tree classification techniques (C&RT). The resulting classification model for predicting dividend decisions correctly classifies 92.86% of companies that paid dividends and 93.3% of companies that did not. The findings, based on the classification tree and importance scale, prove the hypothesis that companies in which individuals and institutional investors have a controlling interest are more likely to pay dividends than other non-state companies. The financial indicators accurately classify only those firms that do not pay dividends, and business risk does not affect classification accuracy at all. The paper substantiates the ways of using the study findings for economic regulation, protection of minority shareholders’ rights, and proliferation of modern corporate governance practices.
- Keywords
-
JEL Classification (Paper profile tab)G32, G35
-
References56
-
Tables1
-
Figures3
-
- Figure 1. Classification tree related to factors determining a dividend policy
- Figure 2. Receiver operating characteristic for the dividend payment (Area under curve: 0.958333; Gini: 0.916667)
- Figure 3. Importance plot
-
- Table 1. Classification accuracy
-
- Abdioğlu, N. (2016). On the Determinants of Corporate Dividend Policy: A Tobit Model Approach. Yönetim ve Ekonomi Araştırmaları Dergisi, 14(1), 332-345.
- Adhikari, N. (2015). Determinants of Corporate Dividend Payout in Nepal. NRB Economic Review, Nepal Rastra Bank, Research Department, 27(2), 53-74.
- Ahmad, G. N., & Wardani, V. K. (2014). The effect of fundamental factor to dividend policy: Evidence in Indonesia Stock Exchange. International Journal of Business and Commerce, 4(2), 14-25.
- Batool, Z., & Attiya Yasmin Javid, A. Y. (2014). Dividend Policy and Role of Corporate Governance in Manufacturing Sector of Pakistan. PIDE-Working Papers, 109, 1-34.
- Brahmaiah, B., Srinivasan, P., & Sangeetha, R. (2018). Determinants of Corporate Dividend Policy in India: A Dinamic Panel Data Analysis. Academy of Accounting and Financial Studies Journal, 22(2), 1-13.
- Chakraborty, S., Shenoy, S. S., & Kumar, N. S. (2018). Empirical evidence on the determinants of dividend pay-outs in the auto components sector in India. Asian Investment Management and Financial Innovations, 15(4), 356-366.
- Cristea C.,& Cristea M. (2017). Determinants of corporate dividend policy: evidence from Romanian listed companies. Annual Session of Scientific Papers IMT ORADEA, 126, 1-4.
- Dang, N. H., Nguyen, V. H., & Dang, T. B. (2018). Factors Influencing the Dividend Policy of Vietnamese Enterprises. Asian Journal of Finance & Accounting, 10(2), 16-29.
- Denis, D. J., & Igor Osobov, I. (2008). Why do firms pay dividends? International evidence on the determinants of dividend policy. Journal of Financial Economics, 89(1), 62-82.
- Dragotă, V., Pele, D. T., & Yaseen, H. (2019). Dividend payout ratio follows a Tweedie distribution: International evidence. Economics: The OpenAccess, Open-Assessment E-Journal, 13(45), 1-35.
- Ernst & Young (2019). Worldwide Corporate Tax Guide.
- Fatemian, F., & Hooshyarzadeh, M. (2016). Role of dividend policy determinants in multinational and domestic companies, evidence from Iran. Problems and Perspectives in Management, 14(3-si), 332-340.
- Gangil, R., & Nathani, N. (2018). Determinants of dividend policy: A study of FMCG sector in India. IOSR Journal of Business and Management, 20(2), 40-46.
- Hill, T., & Lewicki, P. (2006). Statistics: methods and applications; a comprehensive reference for science, industry, and data mining. Tulsa, Okla: StatSoft.
- Jaara, B., Alashhab, H., & Jaara, O. O. (2018). The Determinants of Dividend Policy for Non-financial Companies in Jordan. Journal of Economics and Financial Issues, 8(2), 198-209.
- Jahanzeb, A., Memon, P. A., Tunio, J, A., & Abbas Shah, S. S. (2016). Impact of Corporate Governance and Firm Level Control Variables on Dividend Policy of Service Trade Sector of Malaysia. Journal of Economic and Social Development, 3(2), 115-124.
- Jevstignjejeva, O., Krasovs’kyj, B., & Nasridinov, R. (2019). Skilky Ukraina vtrachaie v ofshorakh [How much does Ukraine lose offshore] (in Ukrainian).
- Juhandi, N., Sudarma, M., Aisjah, S., & Rofiaty. (2013). The Effects of Internal factors and Stock Ownership Structure on Dividend Policy on Company’s Value [A Study on Manufacturing Companies Listed on the Indonesia Stock Exchange (IDX)]. International Journal of Business and Management Invention, 2(11), 6-18.
- Juma’h, A. H., & Olivares Pacheco, C. J. (2008). The financial factors influencing cash dividend policy: A sample of US manufacturing companies. Intermetro Business Journal, 4(2), 23-43.
- Kang, B. S. (2006). Country Influences on Corporate Dividend Policy: Evidence from Australia, France, the U.K., and the U.S. Journal of Korea Trade, 10(3), 19-32.
- Kania, S. L., & Bacon, F. W. (2005). What factors motivate the corporate dividend decision? ASBBS E-Journal, 1(1), 97-107.
- Kannadhasan, M., Aramvalarthan, S., Balasubramanian, P., & Gopika, A. (2017). Determinants of dividend policy of Indian manufacturing companies: Panel autoregressive distributed laganalysis. Academy of Accounting and Financial Studies Journal, 21(2), 1-12.
- Kautsar, A. (2019). The Impact of Ownership Structure on Dividend Payout Property and Construction Companies in Indonesia. International Journal of Academic Research in Economics and Management Sciences, 8(1), 66-74.
- Kaźmierska-Jóźwiak, B. (2015). Determinants of Dividend Policy: Evidence from Polish Listed Companies. Procedia Economics and Finance, 23, 473-477.
- Khan, F. A., & Ahmad, N. (2017). Determinants of Dividend Payout: An Empirical Study of Pharmaceutical Companies of Pakistan Stock Exchange (PSX). Journal of Financial Studies & Research, 1-16.
- Khan, M. N., Naeem, M. U., Rizwan, M., & Salman, M. (2016). Factors Affecting the Firm Dividend Policy: An Empirical Evidence from Textile Sector of Pakistan. International Journal of Advanced Scientific Research and Management, 1(5), 144-149.
- Kolodiziev, O., & Gontar, D. (2014). Stsenarne modeliuvannia stratehichnoho upravlinnia rynkovoiu vartistiu banku [Scenario modeling of the bank’s market value strategic management]. Ekonomicnij Casopis-XXI – Economic Annals-ХХI, 9-10(2), 19-23.
- Komrattanapanya, P., & Suntrauk, P. (2013). Factors Influencing Dividend Payout in Thailand: A Tobit Regression Analysis. International Journal of Accounting and Financial Reporting, 3(2), 255-268.
- Kozmenko, S., & Bielova, I. (2015). Identification of the critical level in accumulation of systemic financial risk in the economy of countries of Central and Eastern Europe. Problems and Perspectives in Management, 13(3), 7-17.
- Kumar, J. (2006). Corporate Governance and Dividend Payout in India. Journal of Emerging Market Finance, 5(1), 15-58.
- Kumar, B. R., & Sujit, K. S. (2018). Determinants of dividends among Indian firms – An empirical study. Cogent Economics & Finance, 6(1), 1-18.
- Kuzucu, N. (2015). A Survey of Managerial Perspective on Corporate Dividend Policy: Evidence from Turkish Listed Firms. International Journal of Research in Business and Social Science, 4(2), 1-19.
- Labhane, N. B., & Mahakud, J. (2016). Determinants of Dividend Policy of Indian Companies: A Panel Data Analysis. Paradigm, 20(1), 36-55.
- Legislation of European Union. (2004). Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids (Text with EEA relevance) OJ L 142, 30.4.2004, 12-23.
- Legislation of Ukraine. (2006). Zakon Ukrainy Pro upravlinnia obiektamy derzhavnoi vlasnosti (№ 185-V) [Law of Ukraine On the Management of State Property (No. 185-V)]. (In Ukrainian).
- Legislation of Ukraine. (2017). Zakon Ukrainy Pro vnesennja zmin do deiakykh zakonodavchykh aktiv Ukrainy shchodo pidvyshchennia rivnia korporatyvnoho upravlinnia v aktsionernykh tovarystvakh (№ 1983-VIII) [Law of Ukraine On Amendments to Some Legislative Acts of Ukraine to Raise the Level of Corporate Governance in Joint Stock Companies (No. 1983-VIII)]. (In Ukrainian).
- Legislation of Ukraine. (2019). Proekt Zakonu pro vnesennia zmin do Podatkovoho kodeksu Ukrainy shchodo zaprovadzhennia podatku na vyvedenyi kapital ta implementatsii standartiv protydii rozmyvanniu podatkovoi bazy ta vyvedennia prybutku za kordon (№ 1185) [Draft Law on Amendments to the Tax Code of Ukraine on Introduction of Withdrawn Capital Tax and Implementation of Standards for Counteracting Erosion of the Tax Base and Withdrawal of Profits Abroad (No. 1185)]. (In Ukrainian).
- Lestari, H. S. (2018). Determinants of corporate dividend policy in Indonesia. Proceedings of The 4th International Seminar on Sustainable Urban Development. Jakarta, Indonesia. IOP Conf. Series: Earth and Environmental Science, 106, 274-279.
- Mahdzan, N. S., Zainudin, R., & Shahri, N. K. (2015). Interindustry dividend policy determinants in the context of an emerging market. Research-Ekonomska Istraživanja, 29(1), 250-262.
- Mai, V. N., & Vuong, Q. D. (2017). Determinants of dividend divided policy of listed companies in Vietnam. Australian Journal of Basic and Applied Sciences, 11(4), 24-32.
- Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.
- National Bank of Ukraine (2020). NBU Key Policy Rate.
- National Commission on Securities and Stock Market. (2019). Zaрalnodostupna informaеtsiina baza danykh Natsionalnoi komisii z tsinnykh paperiv ta fondovoho rynku pro rynok tsinnykh paperiv [Information Data Base of National Commission on Securities and Stock Market]. (In Ukrainian).
- Noorhayati, Y. A., Zuraida, M., & Nurul, S. B. (2018). The Impact of Ownership Structure on Dividend Poiicy: Evidence of Malaysian Listed Firms. Journal of Global Business and Social Entrepreneurship, 4(10), 35-44.
- Nurchaqiqi, R., & Suryarini, T. (2018). The Effect of Leverage and Liquidity on Cash Dividend Policy with Profitability as Moderator Moderating. Accounting Analysis Journal, 7(1), 10-16.
- OECD. (2013) Action Plan on Base Erosion and Profit Shifting.
- Pinto, G., & Rastogi, S. (2019). Sectoral Analysis of Factors Influencing Dividend Policy: Case of an Emerging Financial Market. Journal of Risk and Financial Management, 12(3), 1-18.
- Prokopenko, O., Slatvinskyi, M., Biloshkurska, N., Biloshkurskyi, M., & Omelyanenko, V. (2019). Methodology of national investment and innovation security analytics. Problems and Perspectives in Management, 17(1), 380-394.
- Rohov, H., & Solesvik, M. Z. (2016). Equity Issuance and Corporate Dividend Policy in Emerging Economy Context. Quantitative Methods in Economics, 17(4), 114-137.
- Roy, A., (2015). Dividend Policy, Ownership Structure and Corporate Governance: An Empirical Analysis of Indian Firms. Indian Journal of Corporate Governance, 8(1), 1-33.
- State Statistics Service of Ukraine. (2019). Indicators balances of large and medium enterprises by types of economic activity of 30 September, 2019.
- Takmaz, S. (2017). Dividend Policy Drivers in Turkish Listed Firms. International Journal of Academic Value Studies, 3(16), 40-52.
- Tariq, A. (2015). The Joint Determinants of Leverage and Dividend Policy: A Balanced Panel Study of Non Financial Firms of India and Pakistan. European Scientific Journal, ESJ, 11(10), 311-328.
- Thi, T. H. L., Xuan, H. N., & Manh, D. T. (2019). Determinants of Dividend Payout Policy in Emerging Markets: Evidence from the ASEAN Region. Asian Economic and Financial Review, Asian Economic and Social Society, 9(4), 531-546.
- Tkachuk, D. (2018). Publichni ta pryvatni aktsionerni tovarystva: pro zmishchennia mezh [Public and private joint stock companies: on shifting boundaries]. Juryst & Zakon – Lawyer & Law, 6. (In Ukrainian).
- Yensu, J., & Adusei, C. (2016). Dividend Policy Decision across African Countries. International Journal of Economics and Finance, 8(6), 63-77.