Determinants Of Dividend Policy Of Insurance Companies In Ethiopia

This study seeks to find the determinants of dividend policy of insurance companies inrnEthiopia. In order to achieve this objective, the study uses mixed research approach.rnPanel data covering nine-year period from 2003 – 2011 are analyzed for nine insurancerncompanies. Also in-depth interview is conducted with company officials. The studyrnanalyses a range of determinants of dividend policy: Profitability, growth, Liquidity, Sizernand Leverage of the firm. The random effects technique has been applied to find out thernmost significant variables used by the insurance companies in making the dividendrndecisions. The results show that dividend decisions are relevant and profitability andrnliquidity are the statistically significant factors which positively influence dividend policyrnof insurance companies in Ethiopia. On the other hand, growth influences dividendrnpolicy negatively and significantly. Contrary to theoretical prediction, the study finds thatrnsize and leverage are insignificant in influencing the dividend policy of insurancerncompanies in Ethiopia. The study provides evidence that profitability, liquidity andrngrowth are the most important factors that affect dividend policy of insurance companiesrnin Ethiopia. So, Ethiopian insurance companies’ managers should give consideration tornprofitability, liquidity and growth when they set dividend policy

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