Dynamic Determinants of Dividend Policies in Korean Firms: A Decade-Long Panel Analysis
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This study conducts an extensive exploration of the determinants influencing dividend policies among Korean firms, focusing on the interplay between firm-pecific attributes and macroeconomic conditions over the decade from 2011 to 2020. Leveraging a dynamic panel data model and employing the System Generalized Method of Moments (GMM) for estimation, we examine a dataset comprising 302 non-financial entities listed on the Korean Stock Exchange. The analysis highlights the significance of prior dividend yield, reinforcing theories of dividend smoothing and signaling, and reveals the varied impacts of factors such as business risk, firm size, ownership structure, and economic indicators like inflation and the term premium on dividend payouts across different industries. The findings underscore the importance of considering both micro-level firm characteristics and broader economic conditions in understanding and predicting dividend behavior. This research contributes to a more nuanced comprehension of the factors determining dividend policy within Korean corporations, emphasizing the critical importance of both sector-specific attributes and macroeconomic influences in the context of the financial environment following the global credit crisis. By integrating macroeconomic variables into our analysis, this study addresses a significant lacuna in the existing literature, which has traditionally concentrated on firm-specific variables.
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