Empirical evidence on the determinants of dividend pay-outs in the auto components sector in India

Suman Chakraborty, Sandeep S. Shenoy, Subrahmanya N. Kumar

Research output: Contribution to journalArticle

Abstract

Determinants of dividend policy have been a topic of debate in the academic literature for several decades, but the studies have not been able to give a concluding result on the topic. Existing literature reveals that one of the most challenging decisions, dividend payout, is affected by multiple determinants thereby impacting the value of stock, among which proficatibility, capital structure and level of cash flows are identified to be significant factors. The aim of this study is to evaluate empirically the determinants of dividend payout among the companies in the Indian auto components sector which are listed in major Indian bourses. This paper constitutes a modest attempt to explore the relationship between dividend policy (dividend pay-out ratio) of the companies and the variables representing profitability, capital structure, investments, liquidity and cash flows. The other salient feature of the study is that it examines casual relationship of financial performance, operational efficiencies and investment strategies on decision of paying the dividend. ANOVA, correlation analysis and regression analysis have been used to explore the relationship between the identified variables. The study finds that the dividend policy of the companies in the Indian auto components sector is largely influenced by the operating profit, cash from operations, proportion of cash from operations used for financing the investment activities and the proportion of equity in the capital structure of the companies. The study addresses the Indian auto components sector, which is not researched much, and suggests rejuvenation in dividend policy after accounting a derived variable of cash flow to capital expenditure, as identified relevant to the group of auto manufacturers selected for the study.

Original languageEnglish
Pages (from-to)356-366
Number of pages11
JournalInvestment Management and Financial Innovations
Volume15
Issue number4
DOIs
Publication statusPublished - 01-01-2018

Fingerprint

Dividend policy
Dividends
Empirical evidence
India
Dividend payout
Capital structure
Cash flow
Proportion
Cash
Investment activity
Financing
Factors
Liquidity
Investment strategy
Regression analysis
Profit
Analysis of variance
Capital expenditures
Profitability
Financial performance

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

Cite this

@article{2f86585f605741879dc13c208e7cb920,
title = "Empirical evidence on the determinants of dividend pay-outs in the auto components sector in India",
abstract = "Determinants of dividend policy have been a topic of debate in the academic literature for several decades, but the studies have not been able to give a concluding result on the topic. Existing literature reveals that one of the most challenging decisions, dividend payout, is affected by multiple determinants thereby impacting the value of stock, among which proficatibility, capital structure and level of cash flows are identified to be significant factors. The aim of this study is to evaluate empirically the determinants of dividend payout among the companies in the Indian auto components sector which are listed in major Indian bourses. This paper constitutes a modest attempt to explore the relationship between dividend policy (dividend pay-out ratio) of the companies and the variables representing profitability, capital structure, investments, liquidity and cash flows. The other salient feature of the study is that it examines casual relationship of financial performance, operational efficiencies and investment strategies on decision of paying the dividend. ANOVA, correlation analysis and regression analysis have been used to explore the relationship between the identified variables. The study finds that the dividend policy of the companies in the Indian auto components sector is largely influenced by the operating profit, cash from operations, proportion of cash from operations used for financing the investment activities and the proportion of equity in the capital structure of the companies. The study addresses the Indian auto components sector, which is not researched much, and suggests rejuvenation in dividend policy after accounting a derived variable of cash flow to capital expenditure, as identified relevant to the group of auto manufacturers selected for the study.",
author = "Suman Chakraborty and Shenoy, {Sandeep S.} and Kumar, {Subrahmanya N.}",
year = "2018",
month = "1",
day = "1",
doi = "10.21511/imfi.15(4).2018.29",
language = "English",
volume = "15",
pages = "356--366",
journal = "Investment Management and Financial Innovations",
issn = "1810-4967",
publisher = "Business Perspectives",
number = "4",

}

Empirical evidence on the determinants of dividend pay-outs in the auto components sector in India. / Chakraborty, Suman; Shenoy, Sandeep S.; Kumar, Subrahmanya N.

In: Investment Management and Financial Innovations, Vol. 15, No. 4, 01.01.2018, p. 356-366.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Empirical evidence on the determinants of dividend pay-outs in the auto components sector in India

AU - Chakraborty, Suman

AU - Shenoy, Sandeep S.

AU - Kumar, Subrahmanya N.

PY - 2018/1/1

Y1 - 2018/1/1

N2 - Determinants of dividend policy have been a topic of debate in the academic literature for several decades, but the studies have not been able to give a concluding result on the topic. Existing literature reveals that one of the most challenging decisions, dividend payout, is affected by multiple determinants thereby impacting the value of stock, among which proficatibility, capital structure and level of cash flows are identified to be significant factors. The aim of this study is to evaluate empirically the determinants of dividend payout among the companies in the Indian auto components sector which are listed in major Indian bourses. This paper constitutes a modest attempt to explore the relationship between dividend policy (dividend pay-out ratio) of the companies and the variables representing profitability, capital structure, investments, liquidity and cash flows. The other salient feature of the study is that it examines casual relationship of financial performance, operational efficiencies and investment strategies on decision of paying the dividend. ANOVA, correlation analysis and regression analysis have been used to explore the relationship between the identified variables. The study finds that the dividend policy of the companies in the Indian auto components sector is largely influenced by the operating profit, cash from operations, proportion of cash from operations used for financing the investment activities and the proportion of equity in the capital structure of the companies. The study addresses the Indian auto components sector, which is not researched much, and suggests rejuvenation in dividend policy after accounting a derived variable of cash flow to capital expenditure, as identified relevant to the group of auto manufacturers selected for the study.

AB - Determinants of dividend policy have been a topic of debate in the academic literature for several decades, but the studies have not been able to give a concluding result on the topic. Existing literature reveals that one of the most challenging decisions, dividend payout, is affected by multiple determinants thereby impacting the value of stock, among which proficatibility, capital structure and level of cash flows are identified to be significant factors. The aim of this study is to evaluate empirically the determinants of dividend payout among the companies in the Indian auto components sector which are listed in major Indian bourses. This paper constitutes a modest attempt to explore the relationship between dividend policy (dividend pay-out ratio) of the companies and the variables representing profitability, capital structure, investments, liquidity and cash flows. The other salient feature of the study is that it examines casual relationship of financial performance, operational efficiencies and investment strategies on decision of paying the dividend. ANOVA, correlation analysis and regression analysis have been used to explore the relationship between the identified variables. The study finds that the dividend policy of the companies in the Indian auto components sector is largely influenced by the operating profit, cash from operations, proportion of cash from operations used for financing the investment activities and the proportion of equity in the capital structure of the companies. The study addresses the Indian auto components sector, which is not researched much, and suggests rejuvenation in dividend policy after accounting a derived variable of cash flow to capital expenditure, as identified relevant to the group of auto manufacturers selected for the study.

UR - http://www.scopus.com/inward/record.url?scp=85061947166&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85061947166&partnerID=8YFLogxK

U2 - 10.21511/imfi.15(4).2018.29

DO - 10.21511/imfi.15(4).2018.29

M3 - Article

AN - SCOPUS:85061947166

VL - 15

SP - 356

EP - 366

JO - Investment Management and Financial Innovations

JF - Investment Management and Financial Innovations

SN - 1810-4967

IS - 4

ER -