Determinants of Dividend Payout Policy: In Case of Ethiopian Private Insurance Companies
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Date
2019-02
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Addis Ababa University
Abstract
Corporate dividend policy has been a concern to the financial manager and the firm at large.
Despite many researches had been done, determinants of dividend payout policy are still
unsolved. This research work tried to explore the determinants of corporate dividend payout in
Ethiopian private insurance industry. In order to achieve objective of the research quantitative
research method and explanatory research approach and 11 years panel data from annual
audited report of ten private insurance companies for the years (2007-2017) are employed. Asset
structure, Firm size, Growth in revenue, leverage, liquidity, Profitability, previous year dividend,
GDP and inflation are determinants used in the analysis. Random effect model is used to identify
the most significant variable. The result of the study revealed that growth opportunity, liquidity,
profitability, previous year dividend, GDP and inflation have found to have statistically
significant relation with the dividend payout. In contrary to the hypothesized relation, the
remaining variables found to have statistically insignificant relation with the dividend payout in
Ethiopian private insurance industry. Standing from the finding of the thesis, the researcher is
going to recommend mangers of Ethiopian insurance companies need to consider these factors
while setting/revising their dividend payout policy; on the same token investors need to consider
these factors in their investment decisions when they want to make an investment in Ethiopian
insurance companies. Moreover, further investigations should conduct their study by considering
national bank directives and regulations and including different company selected factors like
investment opportunity, management efficiency, business risk, insider ownership, interest rate
and money supply would provide better insight for determinants of dividend policy in Ethiopian
private insurance Companies.
Description
A Thesis Submitted to the School of Graduate studies of Addis Ababa University
in Partial Fulfillment of the Requirements for the Degree of Master of Science in
Accounting and Finance.
Keywords
Dividend payout, Dividend policy, Insurance Companies