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Do firm characteristics of concentrated ownership firms affect dividend payout beyond traditional motivations?

Avinash Jawade (Department of Finance and Accounting, IIM Raipur, Raipur, India)

Journal of Indian Business Research

ISSN: 1755-4195

Article publication date: 5 May 2021

Issue publication date: 15 July 2021




This study aims to analyze the influence of firm characteristics in dividend payout in a concentrated ownership setting.


This study is probably the first to use the lasso technique for model selection and error prediction in the study of dividend payout in India. The lasso method comprises subsampling the available data set and performing reiterative regressions on those samples to generate the model with the best fit. This study incorporates four different ways of performing lasso treatment to get the best fit among them.


This study analyzes the influence of firm characteristics on dividend payout in the Indian context and asserts that firms with growth potential and earnings volatility do not hesitate to cut dividends. This study does not find evidence for signaling, agency cost and life cycle theories in a concentrated ownership setting. Earnings is the single most important factor to have a positive influence on dividend, while excessively leveraged firms are restrictive of dividend payout. Taxation has a prominent role in altering the way firms pay dividend.

Research limitations/implications

The recent changes in buyback taxation offer another opportunity to test the reactive behavior of firms. Also, given the disregard for traditional motivations, further research needs to be done to determine if dividend adjustments (on the lower side) help enhance firm value or not.

Practical implications

This study may help investors view dividends in a proper perspective. Firms give importance to investments over dividends and thus investors need not dwell on dividend changes if firms fulfill their growth potential.

Social implications

It lends perspective to investors about dividend changes and its importance.


The methodology used for analysis is absolutely original in the literature pertaining to dividend policy in the Indian context. The literature is abundant with theories advocating or opposing the eminence of dividend payout; however, this study takes a holistic view of all influential dividend determinants in literature to understand dividend payout.



Jawade, A. (2021), "Do firm characteristics of concentrated ownership firms affect dividend payout beyond traditional motivations?", Journal of Indian Business Research, Vol. 13 No. 2, pp. 289-307.



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