Document Type


Publication details

Ronapat, M 2004, 'Disappearing dividends: the case of Thai listed firms', DBA thesis, Southern Cross University, Lismore, NSW.

Copyright M Ronapat 2004


The Stock Exchange of Thailand (SET) is an important source of funds for firms and provides opportunities for investors. However, the economic boom of 1990-1996, the Asian Economic Crisis and the recession of 1997-2002 have affected the performance of firms listed at SET. The dividend policies of listed firms have also been influenced by these fluctuations in the business cycle.

This study investigates the phenomenon of disappearing dividends in the developing capital market of Thailand. It adopts a similar methodology to Fama and French (2001) by classifying listed firms in line with changes in their dividend polices over the period 1990 to 2002. More specifically, the study explores the characteristics of firms which pay dividends, non-payers, former payers and firms which have never paid dividends. These characteristics include profitability, investment opportunities and firm size. The analysis uses firm characteristics for predicting the dividend policies of listed firms. Changes in firm characteristics and the propensity to pay dividends are identified in this process.

The analysis suggests that firms which pay dividends tend to be large and highly profitable, although they possess low investment opportunities. The study also suggests that the characteristics of firms which paid dividends changed slightly before the crisis of 1997 and changed markedly during the crisis. However, after the crisis (1998-2002) the characteristics of firms are similar to those observed before the crisis. This result is attributed to the fact that some firms have resumed paying dividends after briefly ceasing this payment during the crisis. More importantly, when firm characteristics are held constant, the propensity to pay dividends of listed firms declined slightly before the crisis and declined strongly after the crisis. Consequently, the majority of new firms and many mature firms do not pay dividends.

The findings of this study are consistent with the results of Fama and French (2001), particularly with regard to the characteristics of firms and changes in the propensity to pay dividends. However, this study extends the knowledge on the phenomenon of disappearing dividends by focussing on a developing economy, Thailand. Finally, this study suggests that investors should consider the characteristics of firms, changes in these characteristics and the propensity to pay dividends when identifying opportunities for investment.