We investigate the drivers of dividend payout policy by analyzing the behavior of 2,636 companies from sixteen emerging countries. Using the generalized method of moments system technique, the results principally support residual cash flow theory as well as the substitution model, agency costs, and signaling, and stand in contrast to the life-cycle theory. The results from sensitivity analysis lead us to conclude that when investor protection is high, cash needs is more important in explaining dividend payout; when investor protection is poor, liquidity seems to be more important.
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Boţoc et al. (2014) studied this question.
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