Determinants of Dividend Policy:Evidence from Ethiopian Insurance Companies

The purpose of this study was to examine the determinants of dividend policy in Ethiopian insurance companies. For this purpose, samples of nine Ethiopian insurance companies were selected. Ordinary Least Squares (OLS) Regression was used to examine the impact of profitability, liquidity, leverage, firm size, growth opportunity, previous year dividend and asset structure on dividend policy in the insurance sector over a period of nine years from 2007/08 to 2015/16. The empirical results of this study showed that profitability, leverage, liquidity, previous year dividend and asset structure have a positive relationship with dividend payout. Meanwhile, firm size and growth opportunities have a negative relationship with dividend payout. Furthermore, the results of the analysis indicated that profitability, liquidity, growth opportunities, previous year dividend and asset structure were the major factors that affected dividend policies of Ethiopian insurance companies and mangers of Ethiopian insurance companies need to consider these factors while setting/revising their dividend payout policy; on the same token investors need to consider these factors in their investment decisions when they want to make an investment in Ethiopian insurance companies.