• Vasantakumar
• CMA Dr. Jeelan Bash V

This study investigates the determinants of dividend pay-outbehavior using a cash flow–based model, focusing on the role of lagged dividends and cash flow in explaining the Dividend Pay-out Ratio (DPR). Dividend policy remains a key concern in corporate finance, particularly under varying liquidity conditions and firm-specific dynamics. The primary objective is to assess whether past dividend decisions (Dt₋₁) and current cash flows (CF) significantly influence DPR, aligning with the partial adjustment and dividend smoothing hypotheses. Using a sample dataset over multiple years, a multiple regression model was applied with DPR as the dependent variable and Dt₋₁ and CF as predictors. Descriptive statistics revealed that DPR and CF are highly skewed with extreme values, whereas Dt₋₁ is relatively stable and normally distributed. The model explains 31.14% of the variation in DPR (Adjusted R² = 0.2426) and demonstrates statistical significance (p = 0.02397). Lagged dividends exhibit a strong positive impact (β = 1.198, p = 0.0083), suggesting firms smooth dividends based on past pay-outs. Cash flow shows a marginally negative effect (β = -0.0048, p ≈ 0.076), indicating that firms may prefer internal reinvestment over distribution. However, diagnostic tests highlight violations of normality and heteroscedasticity, suggesting the need for robust estimation techniques. The estimated adjustment ratio (λ = 119.76%) points to aggressive or unstable dividend revisions, while the negative target pay-out ratio (r = -0.004) questions the suitability of CF as a predictor. Overall, the findings support dividend smoothing behavior driven by historical patterns rather than immediate liquidity. Future research could incorporate alternative variables and nonlinear specifications for enhanced predictive performance

dividend pay-out ratio, cash flow, lagged dividend, dividend smoothing, adjustment ratio, regression analysis.

"EXPLORING DIVIDEND BEHAVIOUR THROUGH PARTIAL ADJUSTMENT: EVIDENCE FROM LAGGED PAY-OUT AND CASH FLOW MODELS", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.12, Issue 8, page no.153-157, August-2025, Available :http://www.jetir.org/papers/JETIRHB06031.pdf

"EXPLORING DIVIDEND BEHAVIOUR THROUGH PARTIAL ADJUSTMENT: EVIDENCE FROM LAGGED PAY-OUT AND CASH FLOW MODELS", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.12, Issue 8, page no. pp153-157, August-2025, Available at : http://www.jetir.org/papers/JETIRHB06031.pdf