120 Finance, Accounting and Business Analysis Volume 7 Issue 1, 2025 http://faba.bg/ ISSN 2603-5324 DOI: https://doi.org/10.37075/FABA.2025.1.10 FACTORS THAT INFLUENCE DIVIDEND POLICY: DO MACROECONOMIC FACTORS MATTER? Emmanuel Kwame Doffour 1* , Emmanuel Boye Asamoah2 , Isaac Kwadwo Anim3 , Eric Agyenim-Boateng4 Department of Accounting, University of Cape Coast, Cape Coast, Ghana1 Department of Accounting, University of Cape Coast, Cape Coast, Ghana2 Department of Accounting, University of Cape Coast, Cape Coast, Ghana3 Directorate of Finance, University of Cape Coast, Cape Coast, Ghana4 * Corresponding author Info Articles Abstract History Article: Submitted 14 March 2025 Revised 11 May 2025 Accepted 29 May 2025 Purpose: This research examines the effects of macroeconomic variables (money supply, interest rates, inflation, and exchange rates) on the dividend policies of firms in the Ghana Stock Exchange. Design/Methodology/Approach: The study employed panel data from 23 Ghanaian firms from 2010 to 2022. To overcome endogeneity and unobserved heterogeneity, a dynamic two-step difference Generalized Method of Moments (GMM) was used, employing Stata 15 for the analysis. Findings: The findings also show that money supply, interest rates and inflation have a positive and significant effect on the dividend payout ratio, while exchange rates have a significant inverse effect on the dividend payout ratio. Practical Implications: These results reveal that macroeconomic factors play a significant part in determining dividend policies in Ghanaian firms. The study has significant implications for corporate managers in the formulation of dividend policy, investors in evaluating the dividend prospects, and policymakers in the realisation of the effects of macroeconomic policies on corporate finance. Originality/Value: This research provides significant information on the relationship between macroeconomic variables and firms’ dividend decisions in Ghana. It builds on the existing literature by including a wider set of macroeconomic variables, unlike most previous Ghanaian studies that mainly focused on firm-specific factors. Paper Type: Research Paper Keywords: Dividend Policy, Macroeconomic Factors, Generalized Method of Moments JEL: G35, L25 * Address Correspondence: E-mail: emmanueldoffour15@gmail.com1 emeritus.asamoah@gmail.com2 ianim@ucc.edu.gh3 eagyenim-boateng@ucc.edu.gh4 http://faba.bg/ https://doi.org/10.37075/FABA.2025.1.10 https://orcid.org/0000-0001-7285-5575 https://orcid.org/0009-0001-6163-5021 https://orcid.org/0000-0002-5138-2307 https://orcid.org/0009-0000-7264-3599 Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 121 INTRODUCTION The rationale for establishing a business focuses on clear objectives, notably enhancing shareholders' wealth by increasing market value (Jensen and Meckling 1976). Shareholder wealth can grow through dividends and capital appreciation, with dividend policies influencing how profits are distributed. Various approaches exist, such as fixed payout ratios and regular dividends with special payments (Brigham and Houston 2013). Research shows that higher risk-averse investor populations correlate with lower dividends (Akyildirim et al. 2014), while factors like profitability, growth prospects, and external influences like economic policies also play significant roles (Khan et al. 2018). Recent macroeconomic changes driven by globalisation and technology are crucial for decision-making in firms, as stock values fluctuate with interest and inflation rates (Fredrick 2021), affecting both immediate returns and future growth (Kanwal and Nadeem 2013). Black (1976) highlighted the lack of strict guidelines on dividend payments versus reinvestment, leaving ongoing questions about dividend policies. The anchor theory, based on the bird-in-hand theory, suggests that economic uncertainty may drive investors to prefer immediate returns (Frankfurter and Wood 2002). Additionally, the Arbitrage Pricing Theory, introduced by Ross (1976), emphasises that multiple factors can influence investment return strategies. Ghana's economy has shifted from agriculture to a more diverse post-colonial landscape, with growth in manufacturing, services, and finance since the Ghana Stock Exchange's inception in 1990 (Kolavalli et al. 2012; Bokpin 2011). In developing countries like Ghana, dividends are key for reliable income and financial stability, especially in economic instability (Marfo-Yiadom and Agyei 2011). Macro- environmental factors, often beyond a company's control, such as high inflation and rising interest rates, can negatively affect corporate earnings and dividends (Adelegan 2009; Ghafoor et al. 2014). The capital market is influenced by GDP growth, inflation, and trade (Kaimba 2010). International firms face challenges from exchange rate fluctuations, impacting costs and stock returns (Zghidi et al. 2016). Taxation and government spending also affect profits and dividend capacity (Appiah-Kubi et al. 2021), while political fluctuations lead to reduced dividends during uncertainty (Montes and Nogueira 2022). Dividends are critical for firms and shareholder returns, particularly in Ghana, where limited investment opportunities create challenges in balancing regular dividends and reinvestment for growth (Bossman et al. 2022; Enyan 2009). Although research on global dividend policies is extensive (Rój 2019; Kaźmierska-Jóźwiak 2015), the specific impacts of macroeconomic factors in Ghana remain under- explored, especially regarding high inflation, exchange rates, and rising interest rates, which can constrain dividend capacity (Abor and Bokpin 2010). This study uniquely analyses the effects of macroeconomic factors, namely, money supply, exchange rates, interest rates, and inflation, on dividend policy for financial and non-financial firms in Ghana, as these factors exert cross-sectoral impacts that affect firms regardless of industry or sector. Also, both were incorporated to increase data variation and sample size which enhances statistical power and robustness in a GMM analysis as well as generalisation. The research aims to fill a gap in understanding the impact of these variables, with specific objectives to assess how each factor influences dividend policy.. LITERATURE REVIEW Theoretical Review Bird-in-hand theory The dividend irrelevance argument is contested by the Bird-in-Hand Theory, which was first proposed by Gordon and Lintner in the 1960s. It highlights that investors would rather have the assurance of dividends than the uncertainty of potential capital appreciation (Gordon 1963). According to Baker and Powell (1999), this uncertainty makes shareholders value an amount of anticipated dividends more highly than a dollar of anticipated stock appreciation. Additionally, the theory posits that dividend payments reduce investor uncertainty, leading to a lower discount rate for dividends compared to potential capital gains (Gordon and Shapiro 1956). The theory suggests that a higher dividend payout ratio corresponds with increased stock valuations, as investors favour the immediate certainty of dividends (Gordon 1959). Moreover, it highlights that macroeconomic volatility heightens the preference for immediate cash returns, influencing corporate dividend decisions during unstable times (Frankfurter and Wood 2002). Thus, firms may strategically increase the dividend payout ratio when facing greater economic uncertainty. Arbitrage pricing theory (APT) APT, established by Ross in 1976, explains asset returns as a linear function of multiple macroeconomic factors. This theory posits that investment returns are influenced by various factors related to future dividends and discount rates (Shrestha and Subedi 2014). It assumes that systematic risk characterises project portfolios and that while some risks can be diversified, pure risks do not exist in this Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 122 process. However, the model has limitations, including uncertainty about which factors determine individual assets (Ross 2013). It assumes a perfect market, which is unrealistic in practice (Dhrymes et al. 1984), and acknowledges that different stocks may respond differently to various risks (Chen et al. 1986). The APT correlates investment returns with discount rates and future dividends (Mukherjee and Naka 1995), while also providing an understanding of corporate planning (Burmeister and Wall 1986). APT includes multiple macroeconomic factors that significantly influence return on securities (Ross 1976) unlike CAPM which includes only market risk (Roll and Ross 1980). This theory can be used to explain how these factors affect dividends paid as a return on share securities. Conceptual Review Money supply According to Agarwal et al. (2018), money supply represents the total amount of monetary instruments in an economy, including cash and demand deposits. It is a crucial macroeconomic indicator influencing spending, inflation, and investment. An increase in money supply typically leads to lower interest rates, making borrowing cheaper, which can boost corporate profits and dividend distributions. Conversely, a decrease in money supply raises interest rates, reduces spending, and negatively impacts earnings, forcing firms to retain earnings for uncertain economic conditions (Mankiw 2021; Mishkin 2007). Friedman and Schwartz (2008) argue that money supply is essential for economic growth; a higher money supply correlates with growth, while a decrease signals a slowdown. The link between money supply and dividend policy is mediated by factors like liquidity, capital structure, and economic conditions. When monetary policy favours abundant money and low interest rates, firms can finance growth and enhance dividends (Blanchard and Johnson 2017). Research by Tran et al. (2019) and Mbaka (2022) indicates that changes in money supply significantly impact firms’ dividend decisions, with expansions allowing for increased dividends and contractions leading to reductions Interest rates Interest rates are a crucial factor in economic activity, affecting the cost of savings and investment. High interest rates lead to high capital costs and reduced capital expenditures, while low rates encourage borrowing and investment. For firms, interest rates heavily influence funding costs and potential returns on investment (Buckley 2013). Additionally, interest rates signal economic conditions, inflation expectations, and monetary policy shifts (Blanchard et al. 2015). High rates can decrease profitability as firms often lower dividends, whereas lower rates reduce capital costs, stimulate economic growth, and allow for higher dividends (Baker and Wurgler 2013). Exchange rate Exchange rates are crucial for currency conversion and significantly impact import and export prices as well as international investments (Madura 2018). They consist of a base (local) currency and a foreign currency; for example, in the USD/EUR, USD is the base currency. Exchange rate systems fall into two categories: floating and fixed. In a floating system, currency values change according to supply and demand, as noted by Krugman and Obstfeld (2009). Conversely, a fixed exchange rate ties a currency to another currency or commodity (like gold) and requires central banks to maintain constant rates, providing stability for international transactions but necessitating large foreign exchange reserves (Frankel 1999). The choice between systems depends on an economy’s characteristics and monetary policy goals. Floating rates offer flexibility, while fixed rates provide stability. Research by Pan et al. (2007) shows that exchange rate and stock price volatility can vary based on the adopted system, affecting firms' risk management strategies. Inflation Inflation, as described by Salim (2019), refers to the overall rise in prices of products and services, often driven by rising expenses like wages and raw material costs, as well as heightened demand exceeding supply. High inflation can impact a company's dividend strategy by decreasing the purchasing power of money, which in turn affects costs and revenues (Basse and Reddemann 2011). Increased operating expenses can reduce gross profits, leading firms to retain more earnings for reinvestment rather than distribute dividends. During periods of low inflation, companies may pay higher dividends (Kauffman et al. 2016) due to fewer high-return investment opportunities Theissen et al. 2023). Ultimately, firms must consider both current and expected inflation rates when formulating their dividend policies to maintain shareholder confidence, as noted by Basse and Reddemann (2011). Dividend policy According to Samrotun (2015), dividend policy involves the trade-off between the dividend payout ratio to investors and retaining earnings for control over funds. While management may lower dividends to Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 123 retain more capital, investors often perceive high dividends as a sign of firm efficiency (Sutrisno 2009). The dividend signalling theory suggests that higher dividends indicate better company performance, influencing investor perception (Pamungkas et al. 2017; Jogiyanto 2003). Ultimately, dividend policy outlines the amount of the total earnings distributed versus reinvested (Brealey et al. 2014). Balancing a high dividend payout ratio with sufficient retained earnings for reinvestment is a key challenge for firms. Empirical Review Rinanda (2022) studied the impact of macroeconomic factors on the dividend policies of manufacturing companies listed on the Indonesian Stock Market (IDX) during the global health crisis. Focusing on food and beverage firms with reports from 2012 to 2016, the research used multiple linear regression through EVIEWS software. Surprisingly, changes in currency exchange rates, inflation rates, and interest rates did not significantly affect the firms' dividend policies. Also, Mbaka (2022) examined the influence of macroeconomic factors on dividend distribution among companies in Nairobi from 1987 to 2021, analysing the data with SPSS. The results showed money supply and exchange rates had a significant direct effect (β = 0.310 and β = 0.317, p = 0.000 < 0.05), but inflation had a positive yet insignificant effect (β = 0.009, p = 0.501 > 0.05). Khan et al. (2018) used annual data from 2001 to 2017 to analyse macroeconomic indicators and dividend payout ratio with OLS. They found that exchange rates positively correlated with the dividend payout ratio, while interest rates and inflation had a negative relationship. Tran et al. (2019) also studied money supply and dividend policies in Vietnamese non-financial companies between 2008 and 2017. Their findings indicated that money supply positively impacted dividend policies, especially during the global financial crisis. Yakubu (2019) studied factors influencing the dividend policies of listed banks in Ghana from 2006 to 2015. The analysis revealed that domestic macroeconomic instability, indicated by inflation, had an insignificant direct impact on these policies. Basse and Reddemann (2011) analysed dividend policies in the U.S. Their results suggested a positive effect of inflation on dividends paid out. Romus et al. (2020) studied how macroeconomic factors, particularly GDP and the interest rate, influence dividend policies. They measured firm performance through ROA and analysed a sample of 10 out of 48 companies in real estate on the IDX. The study found that GDP growth positively affected firm performance and dividend policy, while the interest rate had no significant impact. Moreover, firm performance positively influenced dividend policy. The empirical studies discussed in this paper give a general picture of the macro environment and dividend policies in various countries and at different periods. Rinanda (2022) noted that macroeconomic factors had a limited impact on Indonesian dividend policies, while Mbaka (2022) found a direct association between money supply, exchange rates, and dividend payments in Kenya. Khan et al. (2018) reported that exchange rates positively affected Pakistan's dividend policies, but interest and inflation rates had negative effects. Tran et al. (2019) similarly showed that money supply positively influenced dividend policies in Vietnam. Conceptual Framework Figure 1 shows the impact of macroeconomic factors on a firm's dividend policy. The dependent variable, dividend policy, is influenced by these macroeconomic variables. The study also accounts for various firm-specific factors, including size, age, profitability (measured by ROA and ROE), retained earnings, and cash reserves, as these elements also play a substantial part in shaping the company's dividend policy. (Rinanda 2022; Yakubu 2019; Marfo-Yiadom and Agyei 2011; Ghafoor et al. 2014; Tran et al. 2019) Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 124 Source: Authors’ Compilation Figure 1. Conceptual framework RESEARCH METHODS The study examined a sample of 10 financial and 13 non-financial companies listed in Ghana that provided annual statements from 2013 to 2022. A quantitative approach was employed to gather secondary data. Data on macroeconomic variables were obtained from the annual reports of the Bank of Ghana, while information regarding the dividend payout policy was obtained from the statements of the firms in focus. The dependent variable was dividend policy. The independent variable, encompassing macroeconomic variables, was assessed through money supply, inflation, exchange rates, and interest rates. The analysis also controlled for firm-specific variables, including firm size and age, as well as leverage, profitability (measured by ROA and ROE), retained earnings, and cash holdings. A summary of the variables, their measurements, and empirical justifications is presented in Table 1. Table 1. Measurement of variables Variable Measurement Justification Dividend Policy Dividend payout ratio, calculated as dividends divided by earnings Haider et al. (2012), Ajide and Aderemi (2014), and Marfo-Yiadom and Agyei (2011) Money Supply The average annual monetary base (M2+) Nyamu (2016) Interest Rate Rate of government treasury notes Issahaku et al. (2013) Inflation Rate Consumer price index (CPI) Baba and Nasieku (2016) and Issahaku et al. (2013) Exchange Rate Exchange rate of the local currency per United States dollar Willy (2012) and Issahaku et al. (2013) Firm Size Natural logarithm of a firm’s total assets Elamer and Benyazid (2018) Firm Age Number of years since the company's founding date Nzekwe et al. (2021) Return on Assets Profit before interest and tax over average total assets. Zyadat (2016); Jan et al. (2019); and Buallay (2019) Return on Equity Profit after tax over average shareholders' equity Zyadat (2016); Jan et al. (2019); and Buallay (2019) Leverage Total liabilities to total assets Sumaira and Amjad (2013) Retained Earnings Retained earnings to total assets Tran et al. (2019) Cash Holdings Cash and cash equivalents to net total assets Marfo-Yiadom and Agyei (2011) and Tran et al. (2019) Source: Authors’ Compilation Macroeconomic Variables Money Supply Interest Rate Inflation Rate Exchange Rate Control Variables Firm Age Firm Size Leverage Return on Assets Return on Equity Cash Holdings Retained Earnings Dividend Policy Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 125 The study adopted a panel design because the data structure was of time series (years) and cross- sectional (firms). Based on this structure, the two-step system GMM by Blundell and Bond (1998) was used. The model used is as follows: Dividend Policyit=β0it+B1Money Supplyit+B2Interest Rateit+B3Exchange Rateit+ B4Inflation Rateit+B5Firm Ageit+B6Firm Sizeit+B7Return on Assetsit+B8Return on Equity it+ B9Leverageit+B10Retained Earningsit +B11Cash Holdingsit+Ɛit (1) Where: β = Regression coefficient i= each Firm t= time dimension (years) Ɛ = Error term RESULTS AND DISCUSSION The descriptive analysis of the data gives a general outlook of the major variables of interest (macroeconomic factors, dividend policy and firm-specific factors). Table 2. Descriptive statistics Variable Obs. Mean Std. Dev (SD) Min Max Dividend Payout Ratio 299 0.234 1.455 -20.29 13.166 Money Supply 299 4.716 0.338 4.136 5.256 Interest Rate 299 0.191 0.061 0.113 0.361 Inflation 299 0.151 0.117 0.079 0.541 Exchange Rate 299 0.323 0.183 0.117 0.679 Firm Size 299 5.907 1.092 2.762 8.396 Firm Age 299 46.565 24.427 6 126 Leverage 299 0.747 0.251 0.049 1.947 Return on Assets 299 0.056 0.115 -0.603 0.635 Return on Equity 299 1.032 17.317 -14.96 298.516 Cash Holdings 299 0.116 0.096 0 0.456 Retained Earnings 299 0.016 0.344 -1.572 0.821 Source: Authors’ Compilation Descriptive Statistics The average of the dividend payout ratio variable is 0.234, which shows that, on average, firms remit a small proportion of their earnings as cash as dividends. The high standard deviation (SD) of 1.455 indicates a high volatility in the dividend behaviour of firms, with the highest payout being 13.166. The minimum value is negative (-20.29), which indicates that some firms paid dividends even in the years that they realised losses. Money supply showed an average of 4.716 with an SD of 0.338, ranging from 4.136 to 5.256. The interest rate averages 19.1% with a standard deviation of 0.061, ranging between 11.3% and 36.1%. The inflation rate has a mean of 15.1%, which indicates a moderately inflationary environment with a standard deviation of 0.117, ranging between 7.9% and 54.1%. The exchange rate variable showed an average of 0.323 and an SD of 0.183, which ranges from 0.117 to 0.679. Regarding the analysis of the firm size, the mean value is 5.907 with an SD of 1.092. The mean firm age is 46.565 years, meaning that most of the firms in the sample are established firms and have been in operation for a long time. The SD of 24.427 demonstrates a high variation in the ages of firms, from the youngest being 6 years to the oldest being 126 years. The leverage variable has a mean of 0.747 with an SD of 0.251, implying some variation in the level of debt, although the leverage ratio varies between 0.049 and 1.947. Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 126 The mean for the ROA is 5.6% with an SD of 0.115, ranging between -0.603 and 0.635. The ROE showed an average of 1.032 and an SD as high as 17.317, ranging between -14.96 and 298.516. Cash holdings has a mean of 11.6% of total assets with an SD of 0.096. Lastly, retained earnings have a mean of 0.016 and a standard deviation of 0.344, ranging from -1.572 to 0.821. Correlation Analysis The correlation investigates the strength and direction of relationships between dividend payout ratio and various macroeconomic and firm-specific variables while ensuring there are no multicollinearity issues. The correlation between the dividend payout ratio and money supply is a weak negative at -0.049. The relationship with interest rates is slightly positive at 0.056, while inflation has a modestly stronger positive correlation at 0.087. The exchange rate shows a weak positive correlation of 0.064. For firm-specific variables, firm size shows a negligible correlation with a dividend payout ratio of 0.004 and firm age at 0.021. Leverage has a low negative correlation of -0.040, while ROA has a weak positive correlation of 0.044. Interestingly, ROE shows a near-zero negative relationship at -0.007. Cash holdings correlate positively with the dividend payout ratio at 0.073, and retained earnings show a low positive correlation of 0.100. Among macroeconomic variables, money supply has a strong inverse correlation with the exchange rate at -0.949. The relationship between interest rates and inflation is high at 0.874, indicating that rising inflation tends to lead to higher interest rates, supporting central bank policies. Money supply and inflation correlate positively at 0.472. In firm-specific variables, leverage shows a significant negative correlation with ROA at -0.521, while retained earnings and leverage have a negative correlation of -0.699. Conversely, retained earnings and ROA correlate positively at 0.569, implying profitable firms can retain more earnings for growth or dividends. The pairwise correlation matrix reveals that no correlation coefficients among the independent variables exceed 0.90 (except for money supply and exchange rate), demonstrating that multicollinearity is not an issue in this analysis. Also, the study separates the macroeconomic variables in different models to help mitigate multicollinearity issues. Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 127 Table 3. Pairwise correlations Variables Dividend Payout Ratio Money Supply Interest Rate Inflation Exchange Rate Firm Size Firm Age Leverage Return on Assets Return on Equity Cash Holdings Retained Earnings Dividend Payout Ratio 1.000 Money Supply -0.049 1.000 Interest Rate 0.056 0.444 1.000 Inflation 0.087 0.472 0.874 1.000 Exchange Rate 0.064 -0.949 -0.451 -0.398 1.000 Firm Size 0.004 0.245 0.111 0.120 -0.235 1.000 Firm Age 0.021 0.153 0.064 0.070 -0.143 -0.041 1.000 Leverage -0.040 0.147 0.105 0.111 -0.133 0.157 -0.121 1.000 Return on Assets 0.044 -0.142 -0.065 -0.052 0.162 -0.085 0.174 -0.521 1.000 Return on Equity -0.007 -0.019 0.024 0.001 -0.011 -0.007 -0.026 0.071 -0.025 1.000 Cash Holdings 0.073 0.139 0.092 0.083 -0.135 0.284 0.150 -0.039 0.172 -0.051 1.000 Retained Earnings 0.100 -0.165 -0.094 -0.109 0.152 -0.058 0.265 -0.699 0.569 -0.066 0.277 1.000 Source: Authors’ Compilation Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 128 Regression Results The GMM analysis covers four different models, and each model includes different macroeconomic variables to explain their impact on dividend payout, controlling for firm characteristics. The following observations can be made. Table 4. Dynamic panel-data estimation, two-step difference GMM (1) (2) (3) (4) VARIABLES Dividend Payout Ratio Dividend Payout Ratio Dividend Payout Ratio Dividend Payout Ratio L.Dividend Payout Ratio -0.420*** -0.508*** -0.557*** -0.421*** (0.0484) (0.0546) (0.0574) (0.0277) Money Supply 39.84*** (13.33) Interest Rate 7.612** (3.254) Inflation 4.168** (1.911) Exchange Rate -15.61*** (3.389) Control Variables Firm Size 19.08* 32.92*** 29.91*** 10.87** (10.09) (11.25) (9.100) (5.270) Firm Age -4.805*** -2.261*** -2.030*** -0.997*** (1.547) (0.513) (0.350) (0.363) Leverage 17.79 18.75 16.07 36.10*** (13.65) (17.78) (18.84) (11.37) Return on Assets -22.62*** -36.04*** -37.64*** -9.294* (8.657) (8.650) (7.945) (4.899) Return on Equity -0.00667 -0.00717 -0.00562 -0.0100** (0.00499) (0.00777) (0.00789) (0.00396) Retained Earnings 49.48*** 68.67*** 61.57*** 61.56*** (18.22) (20.56) (20.26) (13.39) Cash Holdings -0.385 -19.56 -26.78* -11.53*** (7.472) (13.88) (15.31) (4.251) Diagnostics Wald chi2 9043.54 960.96 949.24 2706.04 Prob > chi2 0.000 0.000 0.000 0.000 AR(1) z -0.97 -0.84 -0.86 -1.14 AR(1) Pr > z 0.331 0.399 0.387 0.254 AR(2) z 1.45 1.58 1.42 1.17 AR(2) Pr > z 0.146 0.114 0.156 0.242 Sargan chi2 0.88 0.52 0.57 2.24 Sargan Prob > chi2 0.990 0.998 0.997 0.896 Hansen test of overid chi2 7.15 5.24 5.03 6.87 Hansen test of overid Prob > chi2 0.307 0.514 0.539 0.333 Hansen test excluding group chi2 2.05 2.32 2.22 1.76 Hansen test excluding group Prob > chi2 0.358 0.313 0.329 0.415 Instruments 15 15 15 15 Observations 253 253 253 253 Number of Firms 23 23 23 23 Standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1 Source: Authors’ Compilation In the analysis of the four models, the lagged dividend payout ratio variable (L. Dividend Payout Ratio) shows a significant negative coefficient, ranging from -0.420 to -0.557. This indicates that firms with higher past dividend payout ratios tend to reduce current payouts, confirming at the 1% significance level (p < 0.01) that past behaviour influences current dividend policies. In Model 1, the coefficient for money supply is positive (39.84, p < 0.01), suggesting that increased liquidity leads to higher dividends. Model 2 shows a Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 129 positive and significant coefficient for interest rates (7.612, p < 0.05), indicating that rising interest rates compel firms to offer higher dividends to attract investors. Model 3 reveals a positive and significant coefficient for inflation (4.168, p < 0.05), suggesting that firms may increase dividends to counteract inflation's impact on purchasing power. Model 4 displays a negative coefficient for the exchange rate (-15.61, p < 0.01), indicating that currency depreciation leads to a reduced dividend payout ratio. Firm size has a consistently positive effect on dividends across all models, with coefficients ranging from 10.87 to 32.92, while younger firms show a negative correlation with dividends. Leverage is positively linked to dividend policy but is significant only in Model 4 (36.10, p < 0.01). ROA inversely affects dividends (coefficients from -9.294 to -37.64), suggesting firms retain profits for reinvestment. ROE has a significant negative coefficient in Model 4 (-0.0100, p < 0.05), indicating that higher returns lead to profit retention. Retained earnings positively impact the dividend payout ratio across all models (49.48 to 68.67), suggesting firms with ample retained earnings can pay dividends. Lastly, the relationship between cash holdings and dividends is negative and significant only in Model 4 (-11.53, p < 0.01), indicating firms favour retaining cash for operations rather than distributing it. Model Diagnostics The study results using two-step difference GMM for dynamic panel data are presented, focusing on model diagnostics to assess credibility and soundness. Key diagnostics include Wald Chi-square statistics, autocorrelation tests, and over-identification tests. The Wald Chi-square statistic indicates a good model fit with p-values (p < 0.001), suggesting that the variables effectively account for variations in the dividend payout ratio. The AR(1) and AR(2) tests reveal no significant autocorrelation, reinforcing the model's validity. Moreover, Sargan and Hansen's p-values greater than 0.05 indicate the instruments used are valid. Discussion of results Effect of the money supply on dividend policy (Model 1) The positive and highly significant association between money supply and dividend payout ratio (coefficient: 39.84, p<0.01) observed in this study aligns with the studies done by Tran et al. (2019) and Mbaka (2022). A study by Tran et al. (2019) on Vietnamese firms also confirmed our findings. Likewise, Mbaka’s (2022) analysis of companies in Nairobi established that money supply has a direct and significant impact on the dividend payout ratio (β =0.310, p<0.000). Taken together, these papers imply that expansion in money supply results in higher dividend payments, perhaps because of enhanced liquidity in the economy. Effect of interest rates on dividend policy (Model 2) The positive and significant effect of interest rates on the dividend payout ratio (7.612, p<0.05) is somewhat different from some of the previous studies. Khan et al. (2018), in their study on Pakistani textile firms, also revealed that interest rates have a negative, insignificant impact. In the same way, Romus et al. (2020) also stated that the interest rate had no significant impact, and Rinanda (2022) also found the same thing. Contrary to these findings, our results indicate that in the Ghanaian context, higher interest rates may increase the dividend payout ratio, possibly as a way of attracting investors. This could be due to differences in economic environments, as those previous studies were done in Asia. Effect of inflation on dividend policy (Model 3) The positive and significant relationship between inflation and dividend payout ratio (4.168, p<0.05) observed in this study corresponds to some of the previous studies but not others. In their study of the US firms, Basse and Reddemann (2011) noted that inflation has a positive impact, which is consistent with this study. However, our findings are different from Yakubu (2019), who established that while inflation has a positive impact on the dividend policies of the listed banks in Ghana, the impact is insignificant. In the same regard, Mbaka (2022) found a positive but insignificant correlation between inflation and dividend payout ratio in firms in Nairobi (Kenya). It is rather surprising that our results differ from Yakubu’s (2019), given that both works examine Ghana, indicating that the connection between inflation and dividend policy may be contingent on the sector or period under consideration. Our use of GMM estimation instead of Yakubu’s pooled OLS and fixed/random effects models could also explain the differences in the results. Furthermore, Yakubu only focused on banks from the year 2006 to 2015. Effect of exchange rate on dividend policy (Model 4) The negative and highly significant effect of the exchange rate on the dividend payout ratio (-15.61, p<0.01) is in contrast to some of the earlier studies. Mbaka (2022) established a positive and significant correlation between exchange rates and dividend payout ratio (β=0.317, p<0.000) for companies in Nairobi (Kenya). In the same regard, Khan et al. (2018) found a significant and positive correlation between exchange rates and the dividend payout ratio in the Pakistani textile industry. Contrary to these findings, Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 130 our results indicate that in the context of Ghana, currency depreciation results in lower dividend payments. This also differs from the findings of Rinanda (2022), whereby currency exchange rates have an insignificant impact on the dividend policies of Indonesian manufacturing firms during the global health crisis. CONCLUSIONS, RECOMMENDATIONS, AND IMPLICATIONS The purpose of this study was to investigate how macroeconomic variables affect the dividend policies of firms in Ghana. The findings indicate that these factors significantly influence the dividend payout ratio; specifically, money supply, interest rates, and inflation are positively related to dividend payments, while exchange rates have a negative impact. The positive correlation between money supply and dividends suggests that increased liquidity can enhance dividend distributions, indicating that monetary policy expansions may benefit shareholders. Conversely, higher interest rates appear to encourage firms to raise dividends to attract investors, countering the returns on fixed-income assets. Additionally, firms may use dividends as a hedge against inflation, thereby maintaining the purchasing power of shareholders to cover the shareholders’ purchasing power erosion to maintain the value of cash dividends. In contrast, currency depreciation reduces profits and limits cash available for dividends, prompting stricter dividend policies. This is particularly relevant for multinational corporations and foreign investors evaluating opportunities in Ghana amid exchange rate fluctuations. We recommend that corporate managers consider these macroeconomic factors when devising dividend policies and that investors factor them into their assessments of firms' dividend capacity. This research adds to the existing works on dividend policy in Africa. The study's limitation is its concentration solely on Ghanaian firms, which may affect the generalisability of the results. Further studies could compare these findings with those from other regions. Also, future research could explore how macroeconomic factors interact with firm characteristics and corporate governance systems to influence dividend strategies. REFERENCES Abor, J., and G. A. Bokpin. 2010. Investment Opportunities, Corporate Finance, and Dividend Payout Policy: Evidence from Emerging Markets. Studies in Economics and Finance, 27(3): 180–94. https://doi.org/10.1108/10867371011060018. Adelegan, O. J. 2009. Price Reactions to Dividend Announcements on the Nigerian Stock Market. Nairobi: African Economic Research Consortium. Agarwal, J. D., M. Agarwal, A. Agarwal, and Y. Agarwal. 2018. The Theory of Money, Wealth and Efficient Currency Markets: Modelling M5 as Money Supply with Crypto-Currency. Finance India, 32(2): 405–56. Ajide, F. M., and A. A. Aderemi. 2014. The Effects of Corporate Social Responsibility Activity Disclosure on Corporate Profitability: Empirical Evidence from Nigerian Commercial Banks. IOSR Journal of Economics and Finance (IOSRJEF), 2(6): 17–25. Akyildirim, E., I. E. Güney, J. C. Rochet, and H. M. Soner. 2014. Optimal Dividend Policy with Random Interest Rates. Journal of Mathematical Economics, 51: 93–101. https://doi.org/10.1016/j.jmateco.2014.01.005. Alenezi, M. 2015. The Impact of Exchange Rate, Interest Rate and Oil Price Fluctuations on Stock Returns of GCC Listed Companies. PhD diss., University of Plymouth. Appiah-Kubi, S. N. K., K. Malec, J. Phiri, M. Maitah, Z. Gebeltová, L. Smutka, V. Blazek, K. Maitah, and J. Sirohi. 2021. Impact of Tax Incentives on Foreign Direct Investment: Evidence from Africa. Sustainability, 13(15): 8661. https://doi.org/10.3390/su13158661. Baba, S., and T. Nasieku. 2016. Effect of Macroeconomic Factors on the Financial Performance of Commercial Banks in Nigeria. International Journal of Social Science and Information Technology, 2(1): 1278–99. Baker, H. K., and G. E. Powell. 1999. How Corporate Managers View Dividend Policy. Quarterly Journal of Business and Economics, 17–35. Baker, H. K., and R. Weigand. 2015. Corporate Dividend Policy Revisited. Managerial Finance, 41(2): 126– 44. https://doi.org/10.1108/MF-03-2014-0077. Baker, M., and J. Wurgler. 2015. Do Strict Capital Requirements Raise the Cost of Capital? Bank Regulation, Capital Structure, and the Low-Risk Anomaly. American Economic Review, 105(5): 315–20. Basse, T., and S. Reddemann. 2011. Inflation and the Dividend Policy of US Firms. Managerial Finance, 37(1): 34–46. https://doi.org/10.1108/03074351111092139. Black, F. 1976. The Dividend Puzzle. Journal of Portfolio Management, 2(2): 5–8. https://doi.org/10.2752/175693809X418667. https://doi.org/10.1108/10867371011060018 https://doi.org/10.1016/j.jmateco.2014.01.005 https://doi.org/10.3390/su13158661 https://doi.org/10.1108/MF-03-2014-0077 https://doi.org/10.1108/03074351111092139 https://doi.org/10.2752/175693809X418667 Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 131 Blanchard, O., and D. R. Johnson. 2017. Macroeconomics. 7th ed. New York: Pearson. Blanchard, O., E. Cerutti, and L. Summers. 2015. Inflation and Activity—Two Explorations and Their Monetary Policy Implications. NBER Working Paper No. 21726. Cambridge, MA: National Bureau of Economic Research. Blundell, R., and S. Bond. 1998. Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics, 87(1): 115–43. Bokpin, G. A. 2011. Ownership Structure, Corporate Governance and Dividend Performance on the Ghana Stock Exchange. Journal of Applied Accounting Research, 12(1): 61–73. https://doi.org/10.1108/09675421111130612. Bossman, A., S. K. Agyei, O. Asiamah, E. A. Agyei, E. Y. Arhin, and E. Marfo-Yiadom. 2022. Dividend Policy and Performance of Listed Firms on Ghana Stock Exchange. Cogent Economics & Finance, 10(1): 2127220. https://doi.org/10.1080/23322039.2022.2127220. Brealey, R. A., S. C. Myers, and F. Allen. 2014. Principles of Corporate Finance. New York: McGraw-Hill. Brigham, E. F., and J. F. Houston. 2013. Fundamentals of Financial Management. Mason, OH: South-Western Cengage Learning. Brueggeman, W. B., and J. D. Fisher. 2018. Real Estate Finance and Investments. New York: McGraw-Hill. Buallay, A. 2019. Is Sustainability Reporting (ESG) Associated with Performance? Evidence from the European Banking Sector. Management of Environmental Quality: An International Journal, 30(1): 98–115. https://doi.org/10.1108/meq-12-2017-0149. Burmeister, E., and K. D. Wall. 1986. The Arbitrage Pricing Theory and Macroeconomic Factor Measures. Financial Review 21 (1): 1–20. https://doi.org/10.1111/j.1540-6288.1986.tb01103.x. Chen, N. F., R. Roll, and S. A. Ross. 1986. Economic Forces and the Stock Market. Journal of Business, 59(3): 383–403. Cheptoo, M. 2018. The Relationship Between Selected Company Characteristics and Dividend Payout Ratio of Agricultural Firms Listed at the Nairobi Securities Exchange. PhD diss., University of Nairobi. Chong, A. Y. L., K. B. Ooi, and A. Sohal. 2009. The Relationship Between Supply Chain Factors and Adoption of E-Collaboration Tools: An Empirical Examination. International Journal of Production Economics, 122(1): 150–60. https://doi.org/10.1016/j.ijpe.2009.05.012. Cioran, Z. 2014. Monetary Policy, Inflation and the Causal Relation Between the Inflation Rate and Some of the Macroeconomic Variables. Procedia Economics and Finance, 16: 391–401. https://doi.org/10.1016/S2212-5671(14)00818-1. Dewasiri, N. J., W. B. Yatiwelle Koralalage, A. Abdul Azeez, P. G. S. A. Jayarathne, D. Kuruppuarachchi, and V. A. Weerasinghe. 2019. Determinants of Dividend Policy: Evidence from an Emerging and Developing Market. Managerial Finance, 45(3): 413–29. https://doi.org/10.1108/MF-09- 2017-0331. Dhrymes, P. J., I. Friend, and N. B. Gultekin. 1984. A Critical Reexamination of the Empirical Evidence on the Arbitrage Pricing Theory. The Journal of Finance, 39(2): 323–46. Elamer, A. A., and I. Benyazid. 2018. The Impact of Risk Committee on the Financial Performance of UK Financial Institutions. International Journal of Accounting and Finance, 8(2): 161–80. https://doi.org/10.1504/IJAF.2018.10014470. Enyan, E. K. 2009. Determinants of Dividend Payout Ratio of Firms Listed on the Ghana Stock Exchange. PhD diss., University of Cape Coast. Frankel, J. A. 1999. No single currency regime is right for all countries or at all times. Essays in International Finance, 215. Frankfurter, G. M., and B. G. Wood Jr. 2002. Dividend Policy Theories and Their Empirical Tests. International Review of Financial Analysis, 11(2): 111–38. https://doi.org/10.1016/S1057- 5219(02)00071-6. Fredrick, W. O. 2021. Macroeconomic Variables and Performance of Stock Prices of Companies Listed at Nairobi Securities Exchange, Kenya. Journal of Finance and Investment Analysis, 10(3): 87–101. Friedman, M., and A. J. Schwartz. 2008. A Monetary History of the United States, 1867–1960. Princeton, NJ: Princeton University Press. Ghafoor, A., M. A. Khan, S. A. Shah, and H. H. Khan. 2014. Inflation and Dividend Behaviour of Pakistani Firms: An Empirical Investigation Using ARDL. International Journal of Business and Management, 9(9): 86. https://doi.org/10.5539/ijbm.v9n9p86. Gordon, M. J. 1963. Optimal Investment and Financing Policy. The Journal of Finance, 18(2): 264–72. https://doi.org/10.2307/2977907. Gordon, M. J., and E. Shapiro. 1956. Capital Equipment Analysis: The Required Rate of Profit. Management Science, 3(1): 102–10. https://doi.org/10.2307/1927792. https://doi.org/10.1108/09675421111130612 https://doi.org/10.1080/23322039.2022.2127220 https://doi.org/10.1108/meq-12-2017-0149 https://doi.org/10.1111/j.1540-6288.1986.tb01103.x https://doi.org/10.1016/j.ijpe.2009.05.012 https://doi.org/10.1016/S2212-5671(14)00818-1 https://doi.org/10.1108/MF-09-2017-0331 https://doi.org/10.1108/MF-09-2017-0331 https://doi.org/10.1504/IJAF.2018.10014470 https://doi.org/10.1016/S1057-5219(02)00071-6 https://doi.org/10.1016/S1057-5219(02)00071-6 https://doi.org/10.5539/ijbm.v9n9p86 https://doi.org/10.2307/2977907 https://doi.org/10.2307/1927792 Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 132 Haider, J., A. Ali, and T. Sadiq. 2012. Earning Management and Dividend Policy: Empirical Evidence from Pakistani Listed Companies. European Journal of Business and Management, 4(1): 83–90. Issahaku, H., Y. Ustarz, and P. B. Domanban. 2013. Macroeconomic Variables and Stock Market Returns in Ghana: Any Causal Link? Asian Economic and Financial Review, 3(8): 1044–62. Jan, A., M. Marimuthu, R. Hassan, and Mehreen. 2019. Sustainable Business Practices and Firm’s Financial Performance in Islamic Banking: Under the Moderating Role of Islamic Corporate Governance. Sustainability, 11: 1–25. https://doi.org/10.3390/su11236606. Jensen, M. C., and W. H. Meckling. 1976. Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure. Journal of Financial Economics, 3(4): 305–60. Jogiyanto, H. 2013. Portfolio Theory and Investment Analysis. Yogyakarta: BPFE. Kaimba, I. K. 2010. Relationship Between Nairobi Stock Exchange 20 Share Index and Selected Macroeconomic Variables. PhD diss., University of Nairobi, Kenya. Kanwal, S., and M. Nadeem. 2013. The Impact of Macroeconomic Variables on the Profitability of Listed Commercial Banks in Pakistan. European Journal of Business and Social Sciences, 2(9): 186–201. Kauffman, D., T. Koller, M. Krishnan, and S. Lund. 2016. Look Out Below: Why Returns Are Headed Lower, and What to Do About It. McKinsey & Company. https://www.mckinsey.com/industries/private-capital/our-insights/look-out-below-why- returns-are-headed-lower-and-what-to-do-about-it. Kaźmierska-Jóźwiak, B. 2015. Determinants of Dividend Policy: Evidence from Polish Listed Companies. Procedia Economics and Finance, 23: 473–77. https://doi.org/10.1016/S2212-5671(15)00490-6. Khan, F., A. Ullah, M. A. Ali, and M. I. Khan. 2018. The Relationship Between Macroeconomic Variables and the Dividend Payout Ratio of the Textile Sector Listed on the Pakistan Stock Market. Sarhad Journal of Management Sciences, 4(1): 111–21. Kolavalli, S., X. Diao, R. Folledo, G. Ngeleza, E. Robinson, V. Alpuerto, R. Folledo, M. Slavova, K. Ngeleza, and F. Asante. 2012. Economic Transformation in Ghana: Where Will the Path Lead? Journal of African Development, 14(2): 41–78. Kolm, P. N., R. Tütüncü, and F. J. Fabozzi. 2014. 60 Years of Portfolio Optimisation: Practical Challenges and Current Trends. European Journal of Operational Research, 234(2): 356–71. https://doi.org/10.1016/j.ejor.2013.10.060. Krugman, P. R., and M. Obstfeld. 2009. International Economics: Theory and Policy. Upper Saddle River, NJ: Pearson Education. Lintner, J. 1956. Distribution of Incomes of Corporations Among Dividends, Retained Earnings, and Taxes. The American Economic Review, 46(2): 97–113. Madura, J., A. Hoque, and C. Krishnamrti. 2018. International Financial Management. Melbourne: Cengage AU. Mankiw, N. G. 2021. Principles of Economics. Boston: Cengage Learning. Marfo-Yiadom, E., and S. K. Agyei. 2011. Determinants of Dividend Policy of Banks in Ghana. International Research Journal of Finance and Economics 61 (61): 99–108. Mbaka, V. M. 2022. Effects of Macroeconomic Variables on the Dividend Payout of Firms Listed at Nairobi Securities Exchange. PhD diss., University of Nairobi. Mishkin, F. S. 2007. The Economics of Money, Banking, and Financial Markets. Boston: Pearson Education. Montes, G. C., and F. D. S. L. Nogueira. 2022. Effects of Economic Policy Uncertainty and Political Uncertainty on Business Confidence and Investment. Journal of Economic Studies, 49(4): 577–602. https://doi.org/10.1108/JES-12-2020-0582. Mukherjee, T. K., and A. Naka. 1995. Dynamic Relations Between Macroeconomic Variables and the Japanese Stock Market: An Application of a Vector Error Correction Model. Journal of Financial Research, 18(2): 223–37. Nyamu, F. 2016. The Effect of Macroeconomic Factors on the Financial Performance of Insurance Firms in Kenya. PhD diss., University of Nairobi. Nzekwe, O. G., P. V. C. Okoye, and N. N. Amahalu. 2021. Effect of Sustainability Reporting on the Financial Performance of Quoted Industrial Goods Companies in Nigeria. International Journal of Management Studies and Social Science Research, 3(5): 265–80. Pamungkas, A. D. P., D. Hamid, and A. Prasetya. 2017. The Effect of Education and Work Experience on Work Ability and Employee Performance (Study on Employees of PT. INKA (Persero)). Journal of Business Administration, 43(1): 96–103. Pan, M. S., R. C. W. Fok, and Y. A. Liu. 2007. Dynamic Linkages Between Exchange Rates and Stock Prices: Evidence from East Asian Markets. International Review of Economics & Finance, 16(4): 503– 20. https://doi.org/10.1016/j.iref.2005.09.003. https://doi.org/10.3390/su11236606 https://www.mckinsey.com/industries/private-capital/our-insights/look-out-below-why-returns-are-headed-lower-and-what-to-do-about-it https://www.mckinsey.com/industries/private-capital/our-insights/look-out-below-why-returns-are-headed-lower-and-what-to-do-about-it https://doi.org/10.1016/S2212-5671(15)00490-6 https://doi.org/10.1016/j.ejor.2013.10.060 https://doi.org/10.1108/JES-12-2020-0582 https://doi.org/10.1016/j.iref.2005.09.003 Doffour, Asamoah, Anim, Agyenim-Boateng / Finance, Accounting and Business Analysis, Volume 7, Issue1, 2025 133 Rashid, A., and A. A. Rahman. 2008. Dividend Policy and Stock Price Volatility: Evidence from Bangladesh. The Journal of Applied Business and Economics, 8(4): 71–81. Rinanda, Y. 2022. The Influence of Macroeconomic Factors and Financial Performance on Dividend Policy During Pandemic (Manufacturing Company Listed on the IDX). Dinasti International Journal of Economics, Finance & Accounting, 2(6): 637–46. https://doi.org/10.38035/dijefa.v2i6.1300. Rój, J. 2019. The Determinants of Corporate Dividend Policy in Poland. Ekonomika, 98(1): 96–110. https://doi.org/10.15388/Ekon.2019.1.6. Roll, R., and S. A. Ross. 1980. An Empirical Investigation of the Arbitrage Pricing Theory. The Journal of Finance, 35(5): 1073–103. Romus, M., R. Anita, M. R. Abdillah, and N. B. Zakaria. 2020. Selected Firms' Environmental Variables: Macroeconomic Variables, Performance and Dividend Policy Analysis. In IOP Conference Series: Earth and Environmental Science, 469(1): 012047. IOP Publishing. Ross, S. A. 1976. The Arbitrage Theory of Capital Asset Pricing. Journal of Economics Theory, 13: 341–60. https://doi.org/10.1016/0022-0531(76)90046-6. Ross, S. A. 2013. The Arbitrage Theory of Capital Asset Pricing. In Handbook of the Fundamentals of Financial Decision Making: Part I, 11–30. Salim, A. 2019. Inflation: Types, Causes and Effects. Impact Journals, 7(1): 343–50. Samrotun, Y. C. 2015. Dividend Policy and Factors Affecting It. Journal of Paradigms, 13(1). Shrestha, P. K., and B. R. Subedi. 2014. Determinants of Stock Market Performance in Nepal. NRB Economic Review, 26(2): 25–40. https://doi.org/10.3126/nrber.v26i2.52578. Sumaira, B., and T. Amjad. 2013. Determinants of Profitability: Panel Data Evidence from the Insurance Sector of Pakistan. Finance Management, A 57: 14377–82. Sutrisno, H. 2009. Financial Management: Theory, Concepts and Applications. Yogyakarta: Ekonosia. Theissen, M. H., C. Jung, H. H. Theissen, and L. Graf-Vlachy. 2023. Cash Holdings and Firm Value: Evidence for Increasing Marginal Returns. Journal of Management Scientific Reports, 1(3–4): 260– 300. https://doi.org/10.1177/2755031123118731. Tran, Q. T., X. M. Nguyen, T. H. A. Nguyen, T. M. Nguyen, and T. T. T. Truong. 2019. Monetary Loosening and Dividend Policy: Evidence from Vietnamese Stock Market. Asian Academy of Management Journal, 24(2): 95–112. https://doi.org/10.21315/aamj2019.24.2.5. Willy, O. C. O. 2012. Macroeconomic Fluctuations Affect the Financial Performance of Listed Manufacturing Firms in Kenya. International Journal of Social Sciences, 21(1): 26–40. Yakubu, I. N. 2019. Revisiting the Factors Influencing Corporate Dividend Policy Decisions: Evidence from Listed Banks in Ghana. Management & Accounting Review (MAR), 18(3): 31–50. Zghidi, N., I. Mohamed Sghaier, and Z. Abida. 2016. Does Economic Freedom Enhance the Impact of Foreign Direct Investment on Economic Growth in North African Countries? A Panel Data Analysis. African Development Review, 28(1): 64–74. https://doi.org/10.1111/1467-8268.12167. Zyadat, A. A. H. 2017. The Impact of Sustainability on the Financial Performance of Jordanian Islamic Banks. International Journal of Economics and Finance, 9(1): 55–63. https://doi.org/10.5539/ijef.v9n1p55. https://doi.org/10.38035/dijefa.v2i6.1300 https://doi.org/10.15388/Ekon.2019.1.6 https://doi.org/10.1016/0022-0531(76)90046-6 https://doi.org/10.3126/nrber.v26i2.52578 https://doi.org/10.1177/2755031123118731 https://doi.org/10.21315/aamj2019.24.2.5 https://doi.org/10.1111/1467-8268.12167 https://doi.org/10.5539/ijef.v9n1p55