Financial determinants of corporate dividend policy during the COVID-19 crisis: evidence from SET100 companies in Thailand

This study investigates the dividend policy adjustments of non-financial firms in Thailand's SET100 index during the COVID-19 crisis. Using pre-crisis financial data from 2015 to 2018 to explain payout decisions in 2020, this research employs a multinomial logistic regression model to analyze the factors influencing a firm's choice to omit, decrease, increase, or maintain its dividend. The findings reveal two significant and counterintuitive relationships that challenge traditional financial theories in a crisis context. Firstly, higher pre-crisis profitability was paradoxically associated with a greater likelihood of a dividend decrease, suggesting a strong precautionary motive to conserve cash. Secondly, higher pre-crisis leverage was associated with a greater likelihood of a dividend increase, consistent with signaling theory, where indebted firms under scrutiny send a costly signal of confidence. Firm size and liquidity were not found to be significant determinants. These results underscore that during periods of extreme uncertainty, nuanced strategic motives can override traditional financial predictors in shaping corporate payout policy.