The influence of cost of debt, cost of equity and weighted average cost of capital on dividend policy decision: evidence from non-financial companies listed on the Frankfurt Stock Exchange

被引:9
作者
Arhinful, Richard [1 ]
Mensah, Leviticus [1 ]
Amin, Halkawt Ismail Mohammed [2 ]
Obeng, Hayford Asare [3 ]
机构
[1] Cyprus Int Univ, Accounting & Finance Dept, Nicosia 90, Cyprus
[2] Sulaimani Polytech Univ, Dukan Tech Inst, Dept Accounting, Sulaimani, Kurdistan Regio, Iraq
[3] Cyprus Int Univ, Business Adm Dept, Nicosia 90, Cyprus
关键词
Capital; Cost; Dividend; Market share; Non-financial; CORPORATE GOVERNANCE; DETERMINANTS; FLEXIBILITY; MANAGEMENT; LEVERAGE; PAYOUT; FIRMS;
D O I
10.1186/s43093-024-00384-8
中图分类号
F [经济];
学科分类号
02 ;
摘要
Non-financial companies listed on the Frankfurt Stock Exchange face considerable difficulties due to expensive funding and the need to make complex decisions about their capital structure. These problems impact their judgments about dividend policy, resulting in ambiguity and possible inefficiency. This study draws on the bird-in-hand theory to investigate the influence of the cost of capital on dividend policy decisions among non-financial firms listed on the Frankfurt Stock Exchange, focusing on 227 companies from 2005 to 2022. The data for this study were sourced from Thomson Reuters Datastream. Employing the common shock autoregressive distributed lag (CS-ARDL) and two-step generalized method of moments (GMM) estimations, findings reveal that the cost of debt consistently negatively impacts dividend payouts and coverage ratios. In contrast, the cost of equity has an insignificant effect. Conversely, the weighted average cost of capital positively influences dividend payouts and coverage ratios but negatively influences dividend yield. All the findings supported the bird-in-hand theory except for the negative impact of WACC on dividend yield. These insights highlight the importance of considering the cost of capital and market share dynamics in dividend policy formulation. Firms should prioritize efficient debt management to sustain dividend distributions, and aligning dividend policies with overall capital structure management is crucial in this regard, providing a sense of reassurance and confidence to the firms and their stakeholders. This study provides valuable guidance for financial decision-makers navigating dividend-related strategies within corporate environments.
引用
收藏
页数:24
相关论文
共 139 条
[1]   Dividend payouts: Evidence from US bank holding companies in the context of the financial crisis [J].
Abreu, Jose Filipe ;
Gulamhussen, Mohamed Azzim .
JOURNAL OF CORPORATE FINANCE, 2013, 22 :54-65
[2]  
Agarwal Y, 2013, CAPITAL STRUCTURE DECISIONS: EVALUATING RISK AND UNCERTAINTY, P1
[3]   Financial systems, corporate control and capital accumulation [J].
Aglietta, M ;
Breton, R .
ECONOMY AND SOCIETY, 2001, 30 (04) :433-466
[4]   The role of accounting conservatism in mitigating bondholder-shareholder conflicts over dividend policy and in reducing debt costs [J].
Ahmed, AS ;
Billings, BK ;
Morton, RM ;
Stanford-Harris, M .
ACCOUNTING REVIEW, 2002, 77 (04) :867-890
[5]  
Ain QU., 2022, J Adv Res Econ Adm Sci, V3, P95
[6]  
Aivazian V., 2003, J FINANC RES, V26, P371, DOI 10.1111/1475-6803.00064
[7]   Does business strategy affect dividend payout policies? [J].
Akindayomi, Akinloye ;
Amin, Md Ruhul .
JOURNAL OF BUSINESS RESEARCH, 2022, 151 :531-550
[8]  
Al-Malkawi H., 2010, INT B BUSINESS ADM, V9, P171
[9]  
Al-Najjar B, 2017, INT J MANAG FINANC, V13, P304, DOI 10.1108/IJMF-10-2016-0191
[10]   Do dividends announcements signal future earnings changes for Jordanian firms? [J].
Al-Shattarat, Wasim Khalil ;
Al-Shattarat, Basiem Khalil ;
Hamed, Ruba .
JOURNAL OF FINANCIAL REPORTING AND ACCOUNTING, 2018, 16 (03) :417-442