Muhammed Nuredin

Determinants of Dividend Policy of Insurance Companies in Ethiopia Muhammed Nuredin

Dividend policy is controversial. Many doubtful reasons are given for why dividend policy might be important, and many of the claims made about dividend policy are economically illogical. Dividend policy has been the subject of considerable debate. In sum, the above issues coupled with the gap in the literature call for research in the area of determinants of dividend policy. To this end, this book presents a study on the factors that influence dividend policy in the Ethiopian insurance industry. In order to achieve the objective of the study, the study uses mixed research approach. Panel data covering nine-year period are analyzed for nine insurance companies. Also in-depth interview is conducted with company officials. The study analyses a range of determinants of dividend policy: Profitability, growth, Liquidity, Size and Leverage of the firm. The random effects technique has been applied to find out the most significant variables used by the insurance companies in making the dividend decision. The study provides evidence that profitability, liquidity and growth are the most important factors that affect dividend policy of insurance companies in Ethiopia.