The Analysis of the Relationship between Dividend Payout Ratio and the Growth of Future Profitability
碩士 === 國立政治大學 === 財務管理研究所 === 105 === This study examines the relationship between dividend payout ratio and the growth of future profitability. Previous literatures mainly focused on the relationship between dividend change rate and future earnings growth instead of dividend payout ratio. The sampl...
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| Format: | Others |
| Language: | zh-TW |
| Published: |
2017
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| Online Access: | http://ndltd.ncl.edu.tw/handle/v8nbqt |
| Summary: | 碩士 === 國立政治大學 === 財務管理研究所 === 105 === This study examines the relationship between dividend payout ratio and the growth of future profitability. Previous literatures mainly focused on the relationship between dividend change rate and future earnings growth instead of dividend payout ratio. The sample of this study includes companies listed on Taiwan Stock Exchange and the OTC market from 1991 to 2016. Results of the fixed effect model shows that there is a significantly positive relationship between dividend payout ratio and the growth of future profitability. Proxy variables for growth opportunities are used in the fixed effect model to further verify whether the positive relationship can be explained by free cash flow theory. Our results support the explanation, indicating that the positive relationship between dividend payout ratio and the growth of future profitability is stronger when growth opportunities are low. Companies can reduce agency costs by paying out dividends to shareholders, and the returns of investment opportunities on the market are unaffected by competition force, which results in the counter-intuitive phenomenon of higher dividend payout ratio and subsequent growth of future profitability.
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