The Impact of Industry-Sector Influences on Dividend Policy. The Case of Services Firms in Zimbabwe (2009 to 2015)

The goal of this paper is to contribute to the existing body of knowledge by shedding new light on the role of industry influences on the dividend policies pursued by firms in developing economies. The literature on the influence of industry on dividend policy is quite limited and mixed up. Rickard (2012); Fatani and Bildik (2012); La Porta et al. (2000) found that the dividend payout ratios do not differ across industries but differ from country to country. Prior studies elsewhere to examine the influence of industry differences support Rozeff's (1982) model. The study utilized a causal design to investigate the relationships between the variables. Data was analysed using the chi-square technique. The 88 sampled services sector firms were grouped into five industries. The study found that the proportion of dividend payers dropped by 14.8% over the five-year period to 64.7% in 2014. The largest proportion of dividend payers has payout ratios ranging between 10% and 20%. The study found that the banking industry has the largest number of cash distributors and the constant or target payout ratio is widely used in Zimbabwe. Finally, the study concludes that industry influences have no effect on the dividend policies pursued by firms. This study has some additional implications for further research. In particular, it would be more interesting to examine the nature and extend of the correlation that exists between earnings and payout ratios. Also of interest is the need to establish if there is a relationship between a firm's cash holding levels and dividend policy. The interest here will be to find out if firms that hold huge cash reserves have a tendency to pay high dividends or not