Revisiting the Determinants of Dividend Payout Ratios: Evidence from Ghanaian Listed Companies

Abstract

The study used a quantitative research method to investigate thoroughly the whole set of variables that can influence dividend payout decisions of 31 listed companies on the Ghana Stock Exchange.

The study covered an eight year period 2009 – 2016. The secondary data for the study was derived from the published annual reports of the listed companies' websites and Annual Reports Ghana website. The extracted data was analysed by using panel data analysis. Ordinary Least Square panel results were discussed in study. The eighteen factors investigated in the study include current ratio, quick ratio, cash ratio, cash needs, firm size, return on asset, growth opportunity, business risk, debt-to-equity ratio, debt ratio, free cash flow, tangibility of asset, corporate tax, return on equity, earnings per share, interest coverage, change in sales, and dividend lagged. The results revealed a positive relationship between dividend payout ratios and current ratio, cash ratio, cash needs, return on asset, business risk, free cash flow, tangibility of asset, corporate tax, earnings per share and dividend lagged. On the other hand, the results of the study also displayed a negative relationship between dividend payout ratio and quick ratio, firm size, growth opportunity, debt-to-equity ratio, debt ratio, return on equity, interest coverage and change in sales. The results of study imply that the major determinant of dividend payout policy decision of listed companies on the Ghana Stock Exchanges is dividend lagged.