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Dividend payout policies: Evidence from Latin America

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  • Benavides, Julian
  • Berggrun, Luis
  • Perafan, Hector

Abstract

This paper examines dividend payout policies for firms in six Latin American countries from 1995 to 2013. As predicted by the pecking order and trade-off models, the dividend payout is positively linked to profitability and negatively related to past indebtedness and investment opportunities. We also find that the target dividend payout ratio is positively related to governance indicators at the country level. In addition, the speed to which firms adjust their dividends to changes in earnings is lower in high governance countries in the region. Thus, firms smooth dividends more in countries with higher governance scores. We do not find evidence supporting the lifecycle theory nor illiquidity effects on dividends levels.

Suggested Citation

  • Benavides, Julian & Berggrun, Luis & Perafan, Hector, 2016. "Dividend payout policies: Evidence from Latin America," Finance Research Letters, Elsevier, vol. 17(C), pages 197-210.
    • Handle: RePEc:eee:finlet:v:17:y:2016:i:c:p:197-210
    DOI: 10.1016/j.frl.2016.03.012
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    7. Booth, Laurence & Zhou, Jun, 2017. "Dividend policy: A selective review of results from around the world," Global Finance Journal, Elsevier, vol. 34(C), pages 1-15.
    8. Kalyani Mulchandani & Ketan Mulchandani & Sahil Singh Jasrotia, 2021. "Does gender diversity on firm’s board affect dividend payouts? Evidence from India," Future Business Journal, Springer, vol. 7(1), pages 1-11, December.
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    More about this item

    Keywords

    Dividends; Pecking order model; Trade-off model; Lifecycle theory of dividends; Latin America;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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