TY - JOUR
T1 - The story of dividend payment and corporate cash flow in Ghana
AU - Amoah, Benjamin
N1 - Publisher Copyright:
© 2024 African Development Bank (AFD).
PY - 2024/3
Y1 - 2024/3
N2 - The thorny issue and contradictory conclusions on dividend payments and firm value are not ending any time soon. The existence of a divergence of findings in the literature suggests the need for further empirical studies on this subject matter. Therefore, this study focuses on how a firm's cash flow influences dividend payments in Ghana. Using data from 2015 to 2020, pooled ordinary least squares and random effects estimation, this study provides evidence of dividend payments in Ghana. The results show that dividend payments are influenced by a firm's net cash flow from operations, free cash flow to equity, firm size, and age. The relevant macroeconomic variables for dividend payments are inflation and gross domestic product growth. Another finding is that the more nonfinancial firms take on the characteristics of financial firms, the less dividends they pay. Managers of listed firms in Ghana should grow the size of their firms; however, this should be done in a manner not to expropriate value to managers as predicted in the Jensen agency problem associated with free cash flow.
AB - The thorny issue and contradictory conclusions on dividend payments and firm value are not ending any time soon. The existence of a divergence of findings in the literature suggests the need for further empirical studies on this subject matter. Therefore, this study focuses on how a firm's cash flow influences dividend payments in Ghana. Using data from 2015 to 2020, pooled ordinary least squares and random effects estimation, this study provides evidence of dividend payments in Ghana. The results show that dividend payments are influenced by a firm's net cash flow from operations, free cash flow to equity, firm size, and age. The relevant macroeconomic variables for dividend payments are inflation and gross domestic product growth. Another finding is that the more nonfinancial firms take on the characteristics of financial firms, the less dividends they pay. Managers of listed firms in Ghana should grow the size of their firms; however, this should be done in a manner not to expropriate value to managers as predicted in the Jensen agency problem associated with free cash flow.
UR - http://www.scopus.com/inward/record.url?scp=85186859404&partnerID=8YFLogxK
U2 - 10.1111/1467-8268.12736
DO - 10.1111/1467-8268.12736
M3 - Article
AN - SCOPUS:85186859404
SN - 1017-6772
VL - 36
SP - 30
EP - 40
JO - African Development Review
JF - African Development Review
IS - 1
ER -