Life-Cycle Theory and Free Cash Flow Hypothesis: Evidence from Dividend Policy in Thailand

International Journal of Financial Research, Vol. 2, No. 2, 2011

11 Pages Posted: 26 Jun 2011

See all articles by Yordying Thanatawee

Yordying Thanatawee

Burapha University - Graduate School of Commerce

Date Written: June 25, 2011

Abstract

This paper examines dividend policy of Thai listed companies over the period 2002-2008. The results show that larger and more profitable firms with higher free cash flows and retained earnings to equity tend to pay higher dividends. In addition, the evidence indicates that firms with higher growth opportunities, proxied by market-to-book ratio, tend to pay lower dividend payout ratio but higher dividend yield. Collectively, the findings from this paper provide much support for the free cash flow and life-cycle hypotheses. Further, it is found that financial leverage is positively related to dividend payouts, a finding which casts doubt whether Thai firms rely on debt to pay dividends.

Keywords: Dividend Policy, Life Cycle, Free Cash Flow, Thailand

JEL Classification: G30, G35, G39

Suggested Citation

Thanatawee, Yordying, Life-Cycle Theory and Free Cash Flow Hypothesis: Evidence from Dividend Policy in Thailand (June 25, 2011). International Journal of Financial Research, Vol. 2, No. 2, 2011, Available at SSRN: https://ssrn.com/abstract=1872686

Yordying Thanatawee (Contact Author)

Burapha University - Graduate School of Commerce ( email )

169 Longhadbangsaen Road
T.Sansuk
Maung, Chonburi 20131
Thailand

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1,847
Abstract Views
6,236
rank
10,376
PlumX Metrics