Title: Corporate leverage, financial efficiency, and the decision of Indian firms about the amount of dividends

Authors: Amarjit Gill; Nahum Biger; Harvinder S. Mand

Addresses: The University of Saskatchewan, Edwards School of Business, 25 Campus Drive, Saskatoon, SK, S7N-5A7, Canada ' School of Business, Carmel Academic Center, 4, ShaarParlmerStreert, Haifa, 33031, Israel ' Sikh National College, Banga, District Sahid Bhagat Singh Nagar, 144505, East Punjab, India

Abstract: This study investigates the relationships between changes in corporate leverage, changes in financial efficiency, and changes in decision of Indian firms about the amount of dividends. A sample of all top 500 companies listed on the Bombay Stock Exchange for the period 2009-2012 was selected. The findings indicate that the changes in the corporate leverage cause changes in the financial efficiency and the changes in corporate leverage and financial efficiency cause changes in the decision about the amount of dividends in the Indian firms. The findings also indicate that the corporate leverage and the financial efficiency play some role in the decision to pay the amount of dividends. This study contributes to the literature on the factors that cause changes in the financial efficiency of the firm and the decision to pay the amount of dividends. The findings may be useful for financial managers, investors, financial management consultants and other stakeholders.

Keywords: debt leverage; degree of financial leverage; DFL; degree of operating leverage; DOL; financial efficiency; dividends; dividend amounts; corporate leverage; India; dividend decisions.

DOI: 10.1504/IJBG.2013.056202

International Journal of Business and Globalisation, 2013 Vol.11 No.3, pp.258 - 274

Published online: 14 Aug 2013 *

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