Does Social Progress Explain the Dividend Payout Decision?
Does Social Progress Explain the Dividend Payout Decision?

Summary/Abstract: This paper investigates whether national social progress influences dividend payout policy of companies around the world. Using a large database of 12,312 companies from70 countries, for 7 years (2008–2014), I provide strong evidence that social progress issignificant in relation to important corporate decisions on paying dividends. Dividendpayout policy is explained by the social progress of the country in which the company isactive. Access to higher education, satisfaction of basic human needs, overall wellbeingand opportunities positively influence the dividend payout ratio and the propensityto pay dividends. Moreover, the Social Progress Index may be more significant thanGDP per capita in relation to dividend policy. Hence, the new measure of quantifyingthe population’s standard of living, from the social perspective and not from the economicone, is more relevant in the decision-making process on dividend payout.

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