Determinants Of Dividend Payout An Empirical Study On Bank Industry In Ethiopia

This paper aimed at investigating the factors determining dividend payout policy inrnEthiopia bank industry. This study used a panel dataset of audited financial statementrnof banks between the years of 2006 and 2010. Seven hypotheses were investigated usingrnOLS regression techniques. The models considered the impact of profitability, liquidity,rnleverage, firm size, growth, and lagged dividend per share on dividend payout ratios.rnEmpirical results verified that the main characteristics of firm dividend payout policyrnwere that dividend payments related strongly and directly to firm size and laggedrndividend per share, but negatively to the liquidity ratio. However, there is nornrelationship of profitability, leverage, and growth as independent variables withrndividend payout. The statistically significant variables may indicate that firms payrndividends with the intention of reducing the agency problem. Mangers are reluctant torncut dividend. And, negative relation of liquidity with dividend may indicate inefficientrnof bank industry. The results of this study have delivered some insights on therndeterminant factors of dividend in Ethiopia.rnKeywords: dividend policy, irrelevant theorem, bird-in-hand theory, tax preferencerntheory, agency conflict and signaling mechanism

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