What determines dividend payout policies? a cross-continental panel data analysis

This work seeks to extend Amidu and Abor Amidu M, Abor J. Determinants of dividend payout ratios in Ghana. J Risk Finance 2006; 7: 136-45. findings regarding the determinants of dividend payout ratios by examining the same for the European and American firms. First, I will analyze the sum of European and American firms in one single regression model to investigate which are the main variables able to influence firm's dividend payout policies. Second, I will regress the two countries independently to see which developed economy drives the dividend payout policy. The whole investigation process focuses on a five years period of observation that goes from December 2011 to December 2015. Furthermore, I will access the results obtained in the European and American against the one proposed by many scholars in the emerging and developing economies to see whether these policies are similar or not. The entire investigation process has been computed with the support of regression analysis applied to panel data sets. The model is the random effect model. Dependent variable is dividend payout ratio and independent variables are firm's profitabilty, business risk, cash flows, corporate taxes and firm size. The results show positive relation between dividend policy and firm cash flow and corporate tax, a negative relation with firm profitability and firm size and mixed results for business risk. Keywords – Dividend Payout, Dividend ratios, Panel data, Corporate Finance, Europe, America, Emerging Economies