Question

Hello, please in your answer try NOT to be so briefly but instead give a complete answer and explanation. thanks

Does national culture affect corporate payout policy? Explain using examples from current events.

Answer 1

Yes, National culture affect Payout policy of companies.

Company which is lagging behind due to competition, wants to grow more and so it does not pay dividend to its shareholders rather it retains all the amount of profit and reinvest into the business for expansion so that business can grow. This way company can grow but shareholders will get zero dividend, on the other side, shareholders may get capital appreciation as the company will grow, its share price will go up.

Dividend is a part of profit that is distributed to shareholders. It is only distributed out of the profit so if company has loss or less profit, it may not distribute cash dividend rather it can give bonus shares or right issue etc.

Countries with high long term orientation and low assertiveness will pay lower dividend.