Determinants of dividend smoothing: the case of the Turkish stock market

Sabina Nowak , Magdalena Mosionek-Schweda , Urszula Mrzygłód , Jakub Kwiatkowski

Abstract

We examine the dividend smoothing behaviour of companies listed on the Istanbul Stock Exchange (ISE) in the period of 1996–2015. On the basis of Lintner’s dividend partial adjustment model, we calculate the speed of dividend adjustment (SOA) for individual companies from the research sample. As we find only 8% of the SOA results lower than 0.50 and almost 37% higher than 1.00, we ascertain that the Turkish stock market companies do not smooth the dividends. Nevertheless, we proceed to uncover the determinants of the level of the speed of adjustment coefficient. We find that the leverage, debt to equity ratio, current- and quick liquidity ratios, earnings retention ratio, payout and standard deviation of quick ratio statistically significantly affect the SOA level of individual companies in Turkey. In analysing the Istanbul Stock Exchange one should note that it has been operating in the current structure since April 2013 after the merger of all the exchanges functioning in the Turkish capital markets. Currently, the ISE is one of the largest regional stock exchanges, but despite its relatively huge liquidity, it is also risky because of the political pressure. In 2013–2016, the ISE greatly deteriorated in its capitalisation and turnover because of political events. These circumstances may have affected the obtained results.
Author Sabina Nowak KE
Sabina Nowak,,
- Department of Econometrics
, Magdalena Mosionek-Schweda IHZ
Magdalena Mosionek-Schweda,,
- Institute of International Business
, Urszula Mrzygłód IHZ
Urszula Mrzygłód,,
- Institute of International Business
, Jakub Kwiatkowski KEIE
Jakub Kwiatkowski,,
- Department of Economics of European Integration
Pages135-148
Publication size in sheets0.54
Book Bem Agnieszka, Daszyńska-Żygadło Karolina, Hajdíková Taťána, Juhász Péter (eds.): Finance and sustainability : proceedings from the Finance and Sustainability Conference, Wroclaw 2017, Springer Proceedings in Business and Economics, 2018, Springer, ISBN 978-3-319-92227-0, [978-3-319-92228-7], 284 p., DOI:10.1007/978-3-319-92228-7
Keywords in Englishdividend smoothing, emerging markets, Istanbul Stock Exchange
DOIDOI:10.1007/978-3-319-92228-7_12
URL https://rd.springer.com/chapter/10.1007/978-3-319-92228-7_12
Languageen angielski
Score (nominal)5
ScoreMinisterial score = 5.0, 03-08-2018, BookChapterNotSeriesMainLanguages
Ministerial score (2013-2016) = 15.0, 12-07-2018, BookChapterSeriesAndMatConfByIndicator
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