The Relationship between Dividend Payments and Firm Market Value: A Panel Data Analysis of Dividend-Paying Firms Listed on Borsa Istanbul

Abstract

Purpose – The aim of this study is to examine the relationship between total dividend payments, firm size, the proportion of paid-in capital in total liabilities and equity, and firm market value among Borsa Istanbul-listed firms that regularly pay dividends. In addition, the relationships between firm market value and control variables such as annual net profit, dividend yield, and dividend per share are examined.

Design/methodology/approach – The study employs a balanced panel dataset comprising 330 observations for 33 BIST-listed firms over a 10-year period. Based on the model specification tests, a two-way fixed-effects model incorporating both firm and year fixed effects was selected. Considering the presence of heteroskedasticity, autocorrelation, and cross-sectional dependence, the regression results were estimated using Driscoll–Kraay robust standard errors. EViews and Stata software packages were utilized to test the model.

Findings – The findings indicate a positive and statistically significant relationship between total dividend payments and firm market value. Firm size is also positively and significantly associated with market value, whereas no statistically significant relationship is found for the proportion of paid-in capital in total liabilities and equity. Among the control variables, annual net profit and dividend per share are positively and significantly associated with firm market value, while dividend yield exhibits a negative and statistically significant relationship with firm market value.

Discussion – The financial variables examined in this study are associated with firm market value in different directions and magnitudes. The findings demonstrate that dividend payments and firm size are positively associated with firm market value among BIST-listed firms that regularly pay dividends. The original contribution of this study lies in examining the relationship between total dividend payments and market value among regular dividend-paying BIST firms while jointly considering firm size, capital structure, and dividend-related control variables. In addition, the use of a robust estimation approach accounting for cross-sectional dependence, heteroskedasticity, and autocorrelation strengthens the methodological robustness of the study.