Factors Influencing Dividend Payout Policy: An Investigation of Food and Allied Companies Listed on the Dhaka Stock Exchange Limited.

Abstract:

The main objective of the study is to identify if there is a relationship between a numbers of company selected factors such as Profitability, Liquidity, Size, Growth, Leverage and Taxation of Food and Allied Companies Listed in Dhaka Stock Exchange and the companies’ dividend payout ratio which is used as a proxy of dividend payout policy. A sample of seven companies have been taken from Food and Allied Companies listed in DSE following a purposive sampling technique. To meet the objective of this research, ten year financial data from 2011-2020 of listed food and allied companies is used and examined to determine the impact of selected variables on dividend payout. Random effect regression model was used as suggested by the result of hausman test to test the relationship between dividend determinants and dividend payout. Results indicate that among the independent variables Size and Profitability significantly impact the dividend payout policy but in terms of robustness of the model, Liquidity, Size and profitability significantly impact the dividend payout policy of Food and Allied companies listed in DSE. Taking into consideration these findings, it can be said that firms having higher profitability are most likely to pay more dividends. Firms with higher liquidity, growth, size, leverage and taxation pay fewer dividends and vice versa.