Firm-specific Factors and Dividend Practices: Evidence from Nepalese Banks

Abstract

This study examined the firm-specific factors that influence the dividend practice of Nepalese banks. Out of 20 commercial and 17 development banks, 11 were selected as a sample for the study by using convenient sampling technique. Correlation analysis has been applied to test the relationship of firm-specific factors with the dividend practice of banks over the period of F/Y 2076/77 to 2080/81. Return on assets, earnings per share, liquidity, number of shares, and bank size were taken as firm-specific factors. The result demonstrated that the most important factors influencing the dividend of the Nepalese banks are the return on assets and earnings per share, which are positive and significantly associated with both cash and stock dividends. The findings provide guidance to the investors in investment decision-making. Future research may validate the findings of this study by incorporating additional variables and the sample units.