The major finding of their study was that a company with higher internal ownership structure tends to give less divided and institutional investors tend to demand higher dividend pay-out ratio.
Dividend pay-out ratio was considered a measure of the company paying dividend.
After conducting the factor analysis, multiple regression was done on the factor scores as independent variables and the dividend pay-out ratio of 2016 as the dependent variable.
Large market capitalisation, and high PAT indicate high market values and profitability increasing the dividend pay-out ratio of the company.
Since all factors considered above have a positive sign while generating the factor score and the combined impact of all factors is considered to be positively related to dividend pay-out ratio, hence the expected sign of the factor is positive.
RRE and pay-out ratio are correlated to the factor and dividend pay-out ratio in the same way.
return on net worth and dividend pay-out ratio of previous year.
According to this observation, ROI and dividend pay-out ratio are positively correlated.
On running factor analysis, these variables were reduced into 7 factors which had a significant bearing in deciding the dividend policy of the firm when considering dividend pay-out ratio as the main determinant of dividend policy.