Capital accumulation and dividend policies: A comparative analysis for developed and developing markets

The effects of dividend policies on the capital accumulation have been investigated in this study. The dataset used in the study consists of annual observations between 2010 and 2015 of 1117 non-bank firms selected from S&P 500, FTSE 100, Nikkei 225, CAC 40, SSEC, BOVESPA, NSEI and BIST 100 indexes. According to the results that are estimated by System in GMM, dividend policies affect the accumulation of capital as direct and indirect. While the direct effect of cash dividend policies on the capital accumulation is negative, the indirect one is positive. But, the magnitude of the direct effect of cash dividend policies on the capital accumulation is larger than the indirect effect. So the total effect of cash dividend policies on the capital accumulation is determined as negative. The direct effect of cash dividend policies on the capital accumulation is more sensitive to the developed markets, in comparison with the emerging markets. On the other hand, the indirect effect of cash dividend policies on the accumulation of capital is more sensitive to the developing markets, in comparison with the developed markets. In this context, while the total effect of the dividend policies on the capital accumulation of the firms operated in the developed markets is negative, the firms operated in the developing markets is almost zero.