Determinants of Dividend Policy: Evidence from Ethiopian Insurance Companies
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Date
2017-06
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Addis Ababa University
Abstract
The purpose of this study was to examine the determinants of dividend policy in
Ethiopian insurance companies. For this purpose, samples of nine Ethiopian insurance
companies were selected. Ordinary Least Squares (OLS) Regression was used to
examine the impact of profitability, liquidity, leverage, firm size, growth opportunity,
previous year dividend and asset structure on dividend policy in the insurance sector
over a period of nine years from 2007/08 to 2015/16. The empirical results of this
study showed that profitability, leverage, liquidity, previous year dividend and asset
structure have a positive relationship with dividend payout. Meanwhile, firm size and
growth opportunities have a negative relationship with dividend payout. Furthermore,
the results of the analysis indicated that profitability, liquidity, growth opportunities,
previous year dividend and asset structure were the major factors that affected
dividend policies of Ethiopian insurance companies and 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 including different company
selected factors like firm’s age, business risk, insider ownership, corporate tax and
capital structure would provide better insight for determinants of dividend policy in
Ethiopian insurance Companies.
Keyword: Dividend policy; Dividend payout; Insurance Companies
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Keywords
Dividend policy, Dividend payout, Insurance Companies