3.2.1. Dependent Variable—Dividend/Total Assets (Div/TA)

The following were used for determining the dividend payout policy of firms, out of four measures examined by (Aivazian et al. 2003b): dividend payout ratio, dividend yield, Div/TA, and dividend/book value per share; it was found that Div/TA is the most appropriate measure. The authors stated that the ratio of the dividend payout is extremely unstable and non-normal if the earnings reach near zero. Secondly, the dividend yield ratio uses market price, which is not in control of the management. Finally, the dividend to book value per share is prone to more misrepresentations, as it depends on the net worth of the company, which includes free reserves and can be easily distorted by companies. Compared to that, the total assets are less likely to be inaccurate (Aivazian et al. 2003b). Hence, this study also uses the total Div/TA as the dependent variable, and is referred to as dividend policy or payout policy hereafter.
