Beruflich Dokumente
Kultur Dokumente
ISSN 1990-9233
IDOSI Publications, 2014
DOI: 10.5829/idosi.mejsr.2014.19.4.12370
Abstract: Present study investigated the impact of free cash flow on corporate dividend policy in four emerging
economies of South Asia i.e. Bangladesh, India, Pakistan and Sri Lanka. The data of 250 listed companies
collected form published annual reports from 2006-10. Based on the estimated results it was evident that
liquidity plays major role in distribution of cash dividend and in order to pay regular dividends firm needs to
maintain strong cash reserves. The results showed that cash flow from operations is an important factor
affecting the firms ability to pay dividends especially in India and Pakistan. However, the dividend payout of
firms from Sri Lanka and Bangladesh was not affected much from the cash flow from operations.
Key words: Dividend Policy
South Asia
Cash Flow
INTRODUCTION
DIVit= + 1(OCF)it+
(SZ)it +
(LVG)it +
(PRFT)it+ it
(1)
CFO
SZ
LVG
EPS
CFO
SZ
LVG
EPS
CFO
SZ
LVG
EPS
CFO
SZ
LVG
EPS
Expected relationship
Dividend Payout
Dividend Yield
Dividend Intensity
N/A
N/A
N/A
Positive (+)
Positive (+)
Negative (-)
Positive (+)
Panel A
Panel B
------------------------------------------------------------------------------Bangladesh--------------------------------------------------------------------------DPO
DYLD
DINT
CFO
SZ
LVRG
0.032
0.095
0.141
1.000
-0.154
0.015
-0.096
-0.171
1.000
-0.024
-0.119
-0.072
-0.115
-0.028
1.000
0.054
-0.037
0.054
0.102
0.147
-0.059
--------------------------------------------------------------------------------------India------------------------------------------------------------------------DPO
DYLD
DINT
CFO
SZ
LVRG
0.126
0.294
-0.040
1.000
0.204
0.074
0.086
0.109
1.000
-0.243
-0.290
-0.091
-0.010
0.018
1.000
0.093
0.175
0.335
0.067
0.303
-0.222
----------------------------------------------------------------------------------------Pakistan-------------------------------------------------------------------DPO
DYLD
DINT
CFO
SZ
LVRG
0.092
0.000
0.240
1.000
0.048
0.099
0.025
-0.124
1.000
-0.113
-0.172
-0.149
-0.072
-0.195
1.000
0.138
0.279
0.256
0.080
0.176
-0.190
--------------------------------------------------------------------------------------------Sri Lanka-------------------------------------------------------------DPO
DYLD
DINT
CFO
SZ
LVRG
0.259
-0.257
0.101
1.000
0.079
0.044
0.363
-0.003
1.000
0.061
0.181
-0.292
-0.091
-0.020
1.000
-0.058
-0.076
0.141
0.365
-0.120
-0.031
Proxy
[--------India--------]
0.130
-0.981
20.616
17.916
[2.516]
[-1.972]
[15.907]
[4.037]
(0.014)
(0.053)
(0.000)
(0.000)
CFO
0.572
0.901
10.325
9.800
[1.761]
[2.397]
[2.015]
[2.860]
(0.083)
(0.020)
(0.045)
(0.004)
SZ
--0.053
--0.491
--[2.287]
--[0.636]
--(0.026)
--(0.525)
LVG
---0.201
---0.016
--[-1.208]
--[-1.112]
--(0.232)
--(0.267)
PRFT
--0.000
--0.007
--[-0.629]
--[0.380]
--(0.532)
--(0.704)
0.044
0.122
0.012
0.018
R2
Adj R2
0.030
0.063
0.009
0.006
D/W
1.805
1.875
1.778
1.988
F-STAT
3.102
2.079
4.061
1.484
Sig- F
0.083
0.095
0.045
0.207
Dependant Variable: Dividend Payout (DPO); Parentheses contain [t-statistic]; (P-Value).
[----Pakistan----]
0.234
[5.111]
(0.000)
0.277
[2.171]
(0.031)
------------------0.012
0.009
1.354
4.712
0.004
[----Sri Lanka----]
0.201
[0.591]
(0.555)
0.220
[2.690]
(0.004)
0.022
[0.265]
(0.791)
-0.161
[-0.688]
(0.492)
0.005
[2.494]
(0.013)
0.036
0.026
1.653
3.443
0.009
.383
[3.728]
(.000)
.367
[.369]
(.713)
------------------0.045
0.002
1.827
2.565
0.713
-1.803
[-1.571]
(.121)
.121
[.119]
(.906)
.109
[2.038]
(.046)
-.150
[-.378]
(.706)
-.001
[-.181]
(.857)
0.074
0.017
1.957
3.767
0.057
Table 4: Cash Flow Model (Dividend Yield and Dividend Intensity as Dependent Variables)
Constant
CFO
SZ
LVG
PRFT
R2
Adj R2
D/W
F-STAT
Sig- F
[----Bangladesh-----]
[--------India--------]
[----Pakistan----]
[----Sri Lanka----]
------------------------------------------------DYLD
DINT
----------------------------------------------DYLD
DINT
------------------------------------------DYLD
DINT
-----------------------------------------------DYLD
DINT
0.016
-0.043
-0.003
0.162
0.032
0.038
0.017
0.019
0.026
0.048
0.019
0.055
.022
.004
-.115
-.105
[1.751]
[-0.798]
[-0.093]
[0.463]
[10.502]
[3.739]
[7.871]
[2.578]
[7.089]
[1.878]
[3.177]
[1.244]
[2.781]
[.040]
[-3.218]
[-3.108]
(0.086)
(0.429)
(0.926)
(0.645)
(0.000)
(0.000)
(0.000)
(0.010)
(0.000)
(0.061)
(0.002)
(0.214)
(.007)
(.969)
(.001)
(.003)
0.035
0.051
0.490
0.663
0.008
0.009
0.050
0.050
0.005
0.008
0.094
0.077
.171
.165
.011
.015
[0.582]
[1.274]
[2.143]
[2.369]
[0.678]
[0.765]
[6.028]
[5.797]
[0.471]
[0.786]
[5.527]
[4.576]
[2.367]
[2.200]
[2.214]
[2.524]
(0.563)
(0.209)
(0.036)
(0.021)
(0.498)
(0.445)
(0.000)
(0.000)
(0.638)
(0.432)
(0.000)
(0.000)
(.021)
(.032)
(.043)
(.032)
---
0.002
---
-0.010
---
-0.003
---
0.000
---
-0.004
---
-0.006
---
.000
---
.006
---
[0.945]
---
[-0.607]
---
[-1.462]
---
[-0.281] ---
[-0.597]
---
[-0.536]
---
[-.001]
---
[4.031]
---
(0.350)
---
(0.546)
---
(0.145)
---
(0.779)
---
(0.551)
---
(0.592)
---
(.999)
---
(.000)
---
0.000
---
0.119
---
-0.001
---
0.001
---
-0.028
---
-0.044
---
.067
---
-.034
---
[-0.004]
---
[0.955]
---
[-0.508]
---
[-0.685] ---
[-1.590]
---
[-1.459]
---
[1.714]
---
[-2.900]
---
(0.997)
---
(0.344)
---
(0.612)
---
(0.494)
---
(0.113)
---
(0.145)
---
(.092)
---
(.005)
---
0.000
---
0.000
---
0.000
---
0.002
---
0.001
---
0.001
---
.000
---
.001
---
[0.516]
---
[-1.160]
---
[3.471]
---
[0.121]
---
[6.243]
---
[5.062]
---
[-.526]
---
[3.687]
---
(0.608)
---
(0.251)
---
(0.001)
---
(0.940)
---
(0.000)
---
(0.000)
---
(.601)
---
(.000)
0.006
0.002
1.898
1.339
0.563
0.047
0.021
1.050
1.555
0.696
0.067
0.052
1.676
4.593
0.036
0.125
0.060
1.801
1.952
0.120
0.009
0.002
1.992
0.495
0.498
0.046
0.032
1.087
3.355
0.011
0.095
0.092
2.114
36.335
0.000
0.094
0.083
2.221
8.602
0.000
0.004
0.001
1.682
0.222
0.638
0.123
0.114
1.955
12.545
0.000
0.076
0.074
1.729
30.547
0.000
0.158
0.149
1.987
17.182
0.000
0.083
0.064
1.789
5.602
0.021
0.132
0.073
1.853
2.244
0.075
0.403
0.364
1.422
10.316
0.000
0.201
0.161
1.762
12.374
0.000
Dependent Variable: Dividend Yield (DYLD); Dividend Intensity (DINT) Parentheses contain [t-statistic]; (P-Value).
Constant
CFO
SZ
LVG
[----Bangladesh-----]
[--------India--------]
[----Pakistan----]
[----Sri Lanka----]
---------------------------------Tobit
Logit
-------------------------------Tobit
Logit
-------------------------------Tobit
Logit
-----------------------------Tobit
Logit
32.591
[1.64]
1.505
{4.506}
12.313
[2.11]
-0.598
{0.550}
-.1500
[-0.26]
1.134
{3.107}
-6.782
[-1.50]
-5.352
{.005}
(0.104)
(0.755)
(0.035)
(0.217)
(0.795)
(.233)
(0.137)
(.161)
2.322
[2.11]
5.121
{167.528}
7.360
[1.07]
-0.183
{0.833}
.477
[2.37]
4.010
{55.163]
-4.923
[-1.28]
2.696
{14.818}
(0.036)
(0.212)
(0.287)
(0.037)
(0.018)
(.000)
(0.204)
(.376)
-1.625
[-1.79]
-0.108
{0.897}
2.389
[2.41]
0.384
{1.468}
.049
[0.34]
-.101
{.904]
.332
[1.58]
.341
{1.406}
(0.076)
(0.631)
(0.017)
(0.000)
(0.732)
(.670)
(0.118)
(.064)
.189
[0.11]
1.039
{0.561}
-6.204
[-4.87]
-0.498
{0.608}
-1.052
[-2.59]
-3.478
{.031}
-.999
[-0.58]
-3.329
{.036}
(0.910)
(2.826)
(0.000)
(0.000)
(0.010)
(.000)
(0.565)
(.015)
PRFT
.0139
[0.95]
0.028
{0.085}
-.0042
[-0.18]
0.008
{1.008}
.0174
[4.78]
.029
{1.030}
.016
[0.97]
.043
{1.044}
(0.343)
(0.085)
(0.854)
(0.022)
(0.000)
(.000)
(0.336)
(.058)
Pseudo R2
Log Likelihood
0.0073
-276.330
--64.922
0.0178
-1246.58
--305.443
0.0622
-397.58
--373.256
0.0179
-133.066
--72.847
LR Chi2(4)
4.08
---
45.06
---
52.77
---
4.86
---
P-Value Chi2
Cox and Snell
0.3950
---
0.0000
---
0.000
---
0.3017
---
---
0.194
---
0.203
---
0.250
---
0.197
Nagelkerke R2
----
0.278
---
0.299
---
0.334
---
0.278
Wald test
----
11.099
---
72.245
---
31.697
---
10.297
Sig-Wald
----
0.001
---
0.000
---
0.000
---
0.000
477