THE ROLE OF CORPORATE TAX, EARNINGS AND DEBT IN DETERMINING DIVIDEND POLICY OF FIRMS

Authors

Keywords
Dividend payout policy, corporate taxation, earnings, firms, debt.

Abstract
Dividend policy is a critical component of corporate finance strategy, which, when properly implemented, will allow firms to grow. In general, equity holders or corporate fund providers expect a favourable dividend policy as a motivation and reward for their investment in a company. Despite this golden expectation, there are still certain factors that invariably determine the outcome of firms' dividend policies. This study investigates the influence of corporation tax, profits, and debt in determining business dividend policy. In this paper, we argue that dividend policy is influenced not only by corporate taxation, but also by other factors such as profitability and debt. The panel statistics are derived from the businesses' public financial statements, which cover the years 2016 - 2020. To evaluate the panel data, the study uses Pairwise Granger Causality Tests, the Hausman check, the collective outcome prototypical, and the coincidental upshot model. Four null premises are examined, and the results reveal that corporate taxes and earnings have an affirmative impact on businesses' surplus payments. Contrarily, debt and interest expenditures have no momentous inspiration on surplus disbursement. The analysis shows that dividend payments and debt are diametrically opposed. The paper suggests equity financing to enhance organizations’ business expansion.

JEL: G35, H25, H32, H63
Pages: 24

To view the full text of the article click on the relevant button below.

More titles

  • FACTORS INFLUENCING RESTAURANT SELECTION IN THE COVID-19 ERA: A STUDY OF CONSUMER PREFERENCES IN INDIA

    COVID-19 struck the humanity at the end of 2019 and since then it has been ravaging the mankind. Since then the economies have been badly affected; businesses have shut down and the restaurant businesses are no exception to it. Now, when the vaccination programs are being carried out by the governments all around the world, including India, and ...

  • INTEGRATING CRISIS MANAGEMENT MECHANISMS IN EUROPEAN COHESION POLICY

    The series of challenges facing modern society posed by the consequences of the global economic crisis, the debt crisis in Europe, the Covid-19 pandemic, the war in Ukraine, etc. inevitably determine the relevance of research in the field of crises and the mechanisms for dealing with them. The aim of this publication is to examine the ...

  • INNOVATIVE MARKETING TECHNOLOGIES IN THE DEVELOPMENT OF THE TOURISM SPECIALIZED TYPES

    New tools and innovative marketing technologies are emerging in the process of globalization and digitalization of society. The aim of this paper is to review and evaluate the prospects of Internet technologies as tools for analyzing consumers of the tourism market and segmentation of destinations according to specialized types of tourism. The ...