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What firm’s characteristics drive the dividend policy? A mixed-method study on the Euronext stock exchange

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  • Barros, Victor
  • Verga Matos, Pedro
  • Miranda Sarmento, Joaquim

Abstract

What drives the dividend policy at the firm level? Literature has been mainly focused on taxes, type of shareholders and market effects. In this paper, we perform a novel approach to dividend policy literature. First, controlling for tax, market and shareholders effects, the paper intends to analyse which firm variables are more relevant on the decision to pay dividends, on the decision to pay regular dividends and on the decision of the amount of dividends. The paper uses non-financial firms listed on Euronext stock exchanges from 2000 to 2017, and we combined a quantitative econometric perspective with a qualitative, using fsQCA. We found that variables such as operating margins, analyst’s coverage and shares in free float have substantial impacts on the dividend policy of firms. Moreover, firm’s size is the major determinant of the dynamics of the dividend policy.

Suggested Citation

  • Barros, Victor & Verga Matos, Pedro & Miranda Sarmento, Joaquim, 2020. "What firm’s characteristics drive the dividend policy? A mixed-method study on the Euronext stock exchange," Journal of Business Research, Elsevier, vol. 115(C), pages 365-377.
    • Handle: RePEc:eee:jbrese:v:115:y:2020:i:c:p:365-377
    DOI: 10.1016/j.jbusres.2019.11.042
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    6. Francesco Menoncin & Paolo Panteghini & Luca Regis, 2021. "Optimal Firm's Dividend and Capital Structure for Mean Reverting Profitability," CESifo Working Paper Series 9407, CESifo.
    7. Carlos P. Maquieira & Christian Espinosa‐Méndez & José T. Arias, 2024. "The impact of environmental, social and governance (ESG) score on dividend payment of large family firms: What is the role of financial constraints? International evidence," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2311-2332, May.
    8. Barros, Victor & Verga Matos, Pedro & Miranda Sarmento, Joaquim & Rino Vieira, Pedro, 2021. "Do activist shareholders influence a manager’s decisions on a firm’s dividend policy: A mixed-method study," Journal of Business Research, Elsevier, vol. 122(C), pages 387-397.
    9. Akhmadi & Siti Epa Hardiyanti, 2020. "How to Attract Attention of Investors Through Dividend Policy on the Consumer Goods Industries?," International Journal of Business and Economic Affairs (IJBEA), Sana N. Maswadeh, vol. 5(1), pages 23-29.
    10. Akindayomi, Akinloye & Amin, Md Ruhul, 2022. "Does business strategy affect dividend payout policies?," Journal of Business Research, Elsevier, vol. 151(C), pages 531-550.
    11. Ed-Dafali, Slimane & Patel, Ritesh & Iqbal, Najaf, 2023. "A bibliometric review of dividend policy literature," Research in International Business and Finance, Elsevier, vol. 65(C).
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