What influence dividend decisions of firms in Sub-Saharan African?
Journal of Accounting in Emerging Economies
ISSN: 2042-1168
Article publication date: 25 February 2014
Abstract
Purpose
The purpose of this paper is to examine the determinants of the dividend decisions of firms in Sub-Saharan Africa (SSA).
Design/methodology/approach
The paper applies a two-step estimation procedure using firm-level panel data for firms in selected SSA countries during the period from 1997 to 2007. In the first step the paper employs a probit model to estimate the parameters of the determinants of the decision to pay or not to pay dividends. In the second step the paper estimates the parameters of the dividend payout and dividend per share models by applying the generalised least squares techniques.
Findings
The results provide consistent evidence that dividend decision and its payments are influenced by firm profitability level, investment opportunity sets, taxation, leverage, institutional shareholding and risk. The results affirm the signalling, agency cost and free-cash flow theories of dividend policy.
Originality/value
The main value of this paper is identification of factors that influence dividend decisions of firms in SSA.
Keywords
Acknowledgements
The authors thank the editor Matthew Tsamenyi and two anonymous referees for helpful comments. The authors alone are responsible for any remaining deficiencies.
Citation
C. Arko, A., Abor, J., K.D. Adjasi, C. and Amidu, M. (2014), "What influence dividend decisions of firms in Sub-Saharan African?", Journal of Accounting in Emerging Economies, Vol. 4 No. 1, pp. 57-78. https://doi.org/10.1108/JAEE-12-2011-0053
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited