Prague Economic Papers 2021, 30(1):90-114 | DOI: 10.18267/j.pep.758

Does Social Progress Explain the Dividend Payout Decision?

Hanaan Yaseen ORCID...a
a Bucharest University of Economic Studies, Doctoral School of Finance and Center of Financial and Monetary Research (CEFIMO), Bucharest, Romania

This paper investigates whether national social progress influences dividend payout policy of companies around the world. Using a large database of 12,312 companies from 70 countries, for 7 years (2008-2014), I provide strong evidence that social progress is significant in relation to important corporate decisions on paying dividends. Dividend payout policy is explained by the social progress of the country in which the company is active. Access to higher education, satisfaction of basic human needs, overall wellbeing and opportunities positively influence the dividend payout ratio and the propensity to pay dividends. Moreover, the Social Progress Index may be more significant than GDP per capita in relation to dividend policy. Hence, the new measure of quantifying the population's standard of living, from the social perspective and not from the economic one, is more relevant in the decision-making process on dividend payout.

JEL classification: D90, G35, G40

Received: October 7, 2019; Revised: April 30, 2020; Accepted: June 18, 2020; Prepublished online: September 9, 2020; Published: February 4, 2021  Show citation

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Yaseen, H. (2021). Does Social Progress Explain the Dividend Payout Decision? Prague Economic Papers, 30(1), 90-114. doi: 10.18267/j.pep.758
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