Mamaro and Tjano (2019) explored the relationship between dividend payout ratio and the financial
performance of the Top 40 firms listed on the Johannesburg Stock Exchange (JSE), selected based on
market capitalization and dividend payments. While numerous empirical studies have been conducted
in both developed and developing countries, the authors noted the lack of universal consensus,
particularly in developing nations like South Africa, regarding the link between dividend payouts and
financial performance. The study examined dividend payout ratio (DPR) as the dependent variable, and
financial performance indicators including net profit margins (NPM), liquidity (LIQ), leverage (LEV),
growth (GRO), and firm size (SIZE) as independent variables. Using panel data from 2010 to 2015, Top 40
companies were purposively selected for analysis. The fixed effect model was employed following the
Hausman test, and generalized least squares (GLS) were used to address issues of collinearity,
autocorrelation, and heteroskedastic. The findings revealed a negative relationship between dividend
payout ratio and both profitability and liquidity, while a positive relationship was identified between
dividend payout and net profit margins, leverage, growth, and firm size.
Adeiza, Sabo, and Abiola (2020) conducted a study to examine the effects of dividend payout on firm
performance within the Nigerian oil and gas sector. Their research aimed to determine the impact of the
Dividend Payout Ratio (DPR) on three key profitability measures: Net Profit Margin, Return on Assets
(ROA), and Return on Equity (ROE) among quoted oil and gas companies. Utilizing ratio analysis
techniques (specifically Dividend Payout and Profitability Ratios) as their analytical tools, they analyzed
the financial statements of Total Plc and Mobil Plc over a selected period. Secondary data from company
financial reports formed the basis of their analysis. The study’s findings indicated that DPR had a
negative and insignificant impact on firm performance for both companies in 2017 and 2018. However,
a significant relationship was observed for Total Plc in 2015 and 2016, and for Mobil Plc in 2015, with no
significant effect noted in 2016. Overall, the researchers concluded that dividend payments and payout
ratios serve as signals of profitability and financial strength to shareholders. They recommended that
managers should carefully design dividend policies to enhance financial performance and shareholder
value, while also advocating for a reduction in company debt to further strengthen financial outcomes.
Ali, Khurshid, and Chaudhary (2021) investigated the relationship between dividend payout and firm
performance in the context of low growth opportunities, focusing on the manufacturing sector in
Pakistan. A sample of 251 firms, selected from a total of 378 listed on the Pakistan Stock Exchange (PSX),
was analyzed over a ten-year period from 2006 to 2015. Secondary data were gathered from the firms’
financial statements and reports published by the State Bank of Pakistan. Panel data analysis using the
fixed effect model was employed to assess the relationship. The study found that dividend payout ratio
did not have a significant impact on firm performance in industries characterized by low growth
opportunities.
Afifa, Saleh, Al-shoura, and Van (2024) explored the direct relationship between board characteristics,
earnings management (EM) practices, and dividend payout in the context of the Jordanian market, an
emerging market. The study also examined the indirect mediation role of EM practices in the
relationship between board characteristics and dividend payout. The study focused on 43 service firms
listed on the Amman Stock Exchange (ASE) between 2012 and 2019, resulting in 344 firm-year
observations. Panel data analysis was employed, and data was sourced from annual reports and the ASE
database. The findings indicated that board size and independence negatively influenced EM practices,
while CEO/chairman duality had a positive impact. Female representation on the board and the number
of board meetings were positively related to dividend payout but were statistically insignificant. The
study revealed that EM practices had an insignificant negative effect on dividend payout and partially
mediated the relationship between board characteristics and dividend payout. The authors suggested
that the findings could be useful for analysts, investors, and decision-makers to enhance financial
market efficiency in Jordan and improve policymakers’ approaches to financial regulations.
Bossman, Agyei, Asiamah, Agyei, Arhin, and Marfo-Yiadom (2022) examined the relationship between
dividend policy and financial performance among firms listed on the Ghana Stock Exchange (GSE),
considering factors such as firm age, size, capital structure, governance, and financial sector reforms.
Using data from 2015 to 2019, the authors employed the system dynamic General Method of Moments
(GMM) estimation technique. Alongside dividend payout, they introduced new proxies for dividend
policy, including dividend capacity and free cash flow savings, to assess their impact on firm
performance during a period of significant financial sector reforms. The study found that dividend
capacity had a significant positive effect on Return on Assets (ROA) and Return on Equity (ROE), while
free cash flow savings positively impacted both ROA and ROE. However, free cash flow savings showed
an indirect relationship with Tobin’s Q and stock price. The study highlighted that dividend payout
negatively affected owners’ wealth during times of financial crisis. Additionally, financial sector clean-
ups were found to have a detrimental impact only on the performance of non-financial firms. The
authors recommend that firms balance dividend payouts with free cash flow savings to attract diverse
investors and that policymakers and market regulators take steps to mitigate the negative effects of
financial sector reforms on other sectors of the economy.
