Dividend Pattern of Automobile and IT Industry of India; Pre and Post Global Crisis Analysis
Compendium of Papers on Emerging Trends in Finance and Accounting. ISSN 978-93-83302-02-4 (2014), (E-publishing)
9 Pages Posted: 22 Sep 2014
Date Written: August 22, 2014
It is a fact that, the world experienced the cold of global crisis when the American sneezes out the economic crunch in 2008. Generally developing countries like India to some extent enjoy some positive effects from this sneeze. But how was IT and Automobile industries of India affected from global crisis in terms of dividend pattern? This study attempts to find out the impact of the global financial crisis on the dividend pattern and policy of the automobile and IT sector of the Indian economy. Using trend analysis, 10 years data was collect from five listed companies each of both industries. The Automobile industry experience decrease in profit after tax during the crisis but their dividend pattern was about same as pre and post recession era. IT industry on the hand had growing profit at a decreasing rate during the recession but this dividend pattern felt during the crisis. It was found out that whiles the IT industry enjoys growing profit than the Automobile industry; the dividend payout ratio of the Automobile industry (40%) is higher than the IT industry of 30%. Again the Automobile industry maintains on average stable payout ratio and IT industry has fluctuation payout ratio. However, there is evidence that both firm size and clientele influence the impact of a crisis on dividend policy: dividends increase during the crisis for larger firms and those with a higher percentage of institutional owners.
Keywords: Dividend, Dividend payout ratio, Global crisis, PAT
JEL Classification: G32
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