Determinants of Dividend Policy in Emerging Markets: New Evidence from Asian Countries

Quoc Dat Trinh, Nhat Hoang Anh Trinh

Abstract: One of the most discussed topics of corporate finance may be the determinants of the dividend distribution ratio, and some scholars consider it as an unsolved mystery. Understanding dividend policy improves the dividend payment prediction and the collection of suitable valuation models that improve the confidence of investors and promote business activities and economic development. Thus, by analyzing the behavior of 9, 717 non-financial firms, this study explores the drivers of dividend payment policy across 17 economies in the ASIAN region from 2009 to 2017. By using fixed effects method, the paper finds profitability, firm size, liquidity, and growth, have negative impact on dividend payment while, on the other hand, leverage is favorably linked to dividend payment. Unlike other research, we have no clue to prove free cash flow is a significant determinant of dividend payment in Asia. However, these findings are slightly different for middle-income and upper-income countries.

Keywords: Dividend payout, Asian countries, lower-middle income, upper-middle income, fixed effects