What influence dividend decisions of firms in Sub-Saharan African?

Anastacia C. Arko (University of Ghana Business School, Legon-Accra, Ghana)
Joshua Abor (University of Ghana Business School, Legon-Accra, Ghana)
Charles K.D. Adjasi (University of Stellenbosch Business School, Cape Town, South Africa)
Mohammed Amidu (University of Ghana Business School, Legon-Accra, Ghana)

Journal of Accounting in Emerging Economies

ISSN: 2042-1168

Publication date: 25 February 2014

Abstract

Purpose

The purpose of this paper is to examine the determinants of the dividend decisions of firms in Sub-Saharan Africa (SSA).

Design/methodology/approach

The paper applies a two-step estimation procedure using firm-level panel data for firms in selected SSA countries during the period from 1997 to 2007. In the first step the paper employs a probit model to estimate the parameters of the determinants of the decision to pay or not to pay dividends. In the second step the paper estimates the parameters of the dividend payout and dividend per share models by applying the generalised least squares techniques.

Findings

The results provide consistent evidence that dividend decision and its payments are influenced by firm profitability level, investment opportunity sets, taxation, leverage, institutional shareholding and risk. The results affirm the signalling, agency cost and free-cash flow theories of dividend policy.

Originality/value

The main value of this paper is identification of factors that influence dividend decisions of firms in SSA.

Keywords

Citation

C. Arko, A., Abor, J., K.D. Adjasi, C. and Amidu, M. (2014), "What influence dividend decisions of firms in Sub-Saharan African?", Journal of Accounting in Emerging Economies, Vol. 4 No. 1, pp. 57-78. https://doi.org/10.1108/JAEE-12-2011-0053

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

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