Motivators of Dividend Payout among Firms listed on the Stock Exchange of Mauritius

Abstract

This paper aims at investigating the factors which motivate the dividend decision among the firms that are officially listed on the Stock Exchange of Mauritius. Factors such as the current ratio, price-to-book value, earnings per share, retention ratio, debt to equity ratio and market capitalisation rate per sector were considered. Using a sample of 38 listed companies on the SEM, the cross sectional analysis revealed that current earnings, retained earnings and liquidity are among the most significant motivators of dividend payout. Market capitalization rate per sector and price- to-book value turns out to be statistically insignificant while debt to equity ratio turns out to be positively related to dividend pay-out ratio which is in sharp contrast from the implication of the current legislation.

Keywords: Dividend policy, dividend pay out, factors affecting dividend payment