University of Twente Student Theses
Corruption and cash dividend payout in the European Union
Szabo, Laszlo (2025) Corruption and cash dividend payout in the European Union.
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| Abstract: | In the past decades, plenty of research has been conducted in order to solve the ‘dividend puzzle’. However, the determinants of dividend payout are still not clear to this date despite the extensive research on this field. Prior studies point out that corruption influences the decision making in finance, potentially to mitigate agency costs and to protect the interest of shareholders. Using firm-specific financial date and country-specific indices of the 27 EU countries for the period of 2015-2022, this research attempts to unravel whether dividend payout in the EU can be explained by the level of perceived corruption. A quantitative study with Logistic Regression (LOGIT) and Ordinary Least Squared (OLS) analyses have been conducted to assess the impact of corruption on both the Decision to Pay (DTP) and the Dividend Payout Ratio (DPR). Findings show that there is a statistically significant positive relationship between both dependent variables and the level of perceived corruption in the given firm´s country. Therefore, indicating that that the level of perceived corruption in EU countries explains dividend payout policy to a certain extent. The study also highlights the importance of considering cultural factors when tackling the dividends puzzle. Power Distance negatively affects the Decision to Pay, providing statistical confirmation to the outcome model of Agency Theory. The study shows that the main predictors of the payout decision within the EU have remained the well-established ones such as profitability, cash holding, leverage and firm size. These results may contribute to the better understanding of the dividends puzzle and the influence of corruption on corporate financial strategies |
| Item Type: | Essay (Master) |
| Faculty: | BMS: Behavioural, Management and Social Sciences |
| Programme: | Business Administration MSc (60644) |
| Link to this item: | https://purl.utwente.nl/essays/105212 |
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