The association between dividend payout and firm growth: Australian evidence

Michael Dempsey, Abeyratna Gunasekarage, Thanh Tan Truong

Research output: Contribution to journalArticleResearchpeer-review

2 Citations (Scopus)

Abstract

We report that whereas firms with high earnings distributions tend to have low-to-moderate growth (consistent with conventional theory), firms with low earnings distributions run the range between high and low performers. We interpret our findings for firm growth and payout policy in relation to the firm's location on the Boston Consulting Group (BCG) matrix that combines high/low growth with high/low market share. Our findings suggest that the market has difficulty in distinguishing between these types of firms. A concern is that investor preferences as an outcome may be focussed on dividend-paying firms at the expense of younger growing firms in need of retained earnings. Accounting and Finance

Original languageEnglish
Pages (from-to)2345-2376`
Number of pages32
JournalAccounting & Finance
Volume59
Issue number4
DOIs
Publication statusPublished - Dec 2019

Keywords

  • BCG matrix
  • Dividend payout
  • Firm growth
  • Firm life cycle
  • P/E ratio

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