Dividend policy and firm performance: A comparison between Italian and Polish firms

Objectives: Several theories have been documented on the relevance and irrelevance of dividend policy. Many authors continue to come up with different findings from their studies on the relevance of dividend policy and firm performance. In this paper, after an analysis of the different dividend payouts offered by Italian and Polish firms, we want to establish the relationship between dividend payout and firm performance among listed companies in Italy and in Poland. The research is also driven by the following specific research objectives: 1. To establish the association between dividend payout and firm profitability among listed companies in Italy and in Poland; 2. To establish the extent of the association between dividend payout and firm profitability in both countries.

Data/methods: In the present study, data are selected from the main equity markets of the Italian and Polish stock exchanges, in particular focusing also on small and medium sized firms. Furthermore, the analysis considers two relevant indexes, the Italian FTSE Milano Italian Borsa (MIB) Dividend and the Polish WIG, the total return index, which includes dividends and subscription rights. We analyze our data by employing multiple regressions and  descriptive statistics. The analysis is done using the ‘Statistical Package for Social Sciences’ (SPSS).

(Expected) results. The study findings are of great relevance to scholars investigating dividend issues and to financial managers and investors. The paper finds that profitability has a significant impact on the dividend payout of listed firms. That is, an increase in the financial ratios of a firm tends to positively affect the dividend payout level of that firm. Some differences emerge between Italian and Polish dividend policies, in particular for small-size firms.