When the market to book ratio is dropped the effect

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risk pay higher dividends. When the market-to book ratio is dropped, the effect of both debt and ROE is even stronger, whereas the other three variables remain insignificant. The adjusted R 2 values seem reasonable for most of the emerging market firms. With respect to the individual variables, the debt ratio shows the same sig- nificant negative relation in every country. The market-to-book ratio has a positive coefficient for every country, although for Turkey and Pakistan the limited sample sizes contribute to insignificant coefficients. Finally, ROE has a positive coeffi- cient for every country; however, the coefficient for Pakistan is negative when the market-to-book ratio is excluded. In short, we observe a similar relation between dividends and these three variables as that exhibited by U.S. firms. For the other variables, the results are mixed. Neither the size coefficient nor the business risk coefficient displays consistent signs; although they may be important in one country, their importance is the opposite or insignificant in another country. The only significant difference from the U.S. results is that firms with more tangible assets tend to have lower dividends, and in six countries this is significant. A possible explanation for this is that when the assets are more tangible, fewer short-term assets are available for banks to lend against. This imposes financial constraints on firms operating in more primitive financial systems, where the main source of debt is short-term bank financing.
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382 The Journal of Financial Research TABLE 5. Regression Estimates. Observations Constant Busrisk Size Tangibility ROE M/B Debt Ratio Adj R 2 Korea 0 . 068 0 . 067 0 . 201 0 . 005 0 . 029 0 . 003 0 . 043 31 . 6% 951 (13 . 92) ( 3 . 73) ( 5 . 23) ( 2 . 45) (9 . 75) (5 . 60) ( 15 . 42) 965 0 . 061 0 . 074 0 . 107 0 . 004 0 . 027 0 . 046 28 . 8% (12 . 25) ( 3 . 99) ( 2 . 84) ( 1 . 76) (8 . 94) ( 16 . 07) India 0 . 109 0 . 034 0 . 145 0 . 038 0 . 050 0 . 003 0 . 094 49 . 4% 841 (11 . 56) (1 . 52) ( 2 . 40) ( 11 . 78) (9 . 34) (5 . 02) ( 21 . 11) 931 0 . 118 0 . 143 0 . 157 0 . 044 0 . 069 0 . 104 11 . 8% (4 . 52) (2 . 32) ( 0 . 97) ( 4 . 94) (4 . 74) ( 8 . 18) Malaysia 0 . 045 0 . 130 0 . 516 0 . 031 0 . 029 0 . 003 0 . 114 11 . 7% 687 (1 . 77) ( 1 . 66) (2 . 60) ( 2 . 41) (1 . 67) (1 . 81) ( 7 . 66) 710 0 . 052 0 . 092 0 . 527 0 . 038 0 . 029 0 . 111 11 . 6% (2 . 14) ( 1 . 26) (2 . 78) ( 3 . 15) (2 . 11) ( 7 . 95) Thailand 0 . 056 0 . 049 0 . 086 0 . 012 0 . 195 0 . 003 0 . 114 48 . 1% 192 (2 . 06) (0 . 63) (0 . 43) (0 . 96) (7 . 78) (2 . 87) ( 9 . 25) 210 0 . 031 0 . 089 0 . 365 0 . 022 0 . 109 0 . 098 35 . 9% (1 . 10) (1 . 03) (1 . 78) (1 . 67) (5 . 17) ( 7 . 61) Zimbabwe 0 . 149 0 . 481 0 . 260 0 . 227 0 . 073 0 . 026 0 . 170 55 . 6% 54 (1 . 12) (1 . 72) (0 . 25) ( 4 . 58) (1 . 02) (2 . 78) ( 3 . 14) 54 0 . 355 0 . 423 1 . 129 0 . 294 0 . 141 0 . 222 49 . 3% (2 . 99) (1 . 42) ( 1 . 15) ( 6 . 41) (1 . 97) ( 4 . 10) Jordan 0 . 047 0 . 030 0 . 356 0 . 045 0 . 058 0 . 021 0 . 086 41 . 5% 316 (2 . 99) ( 0 . 56) (1 . 64) ( 3 . 91) (5 . 09) (6 . 19) ( 4 . 57) 334 0 . 091 0 . 073 0 . 007 0 . 050 0 . 076 0 . 048 33 . 7% (7 . 09) ( 1 . 46) ( 0 . 04) ( 4 . 34) (7 . 02) ( 2 . 68) Pakistan 0 . 583 0 . 466 4 . 041 0 . 222 0 . 018 0 . 008 0 . 257 28 . 9% 196 (6 . 32) (1 . 69) ( 3 . 46) ( 4 . 57) (0 . 62) (0 . 54) ( 5 . 54) 890 0 . 055 0 . 175 0 . 682 0 . 035 0 . 003 − − 0 . 097 4 . 4% (1 . 92) (1 . 89) (1 . 95) ( 2 . 15) ( 0 . 50) ( 5 . 68) Turkey 0 . 216 0 . 180 1 . 171 0 . 001 0 . 174 0 . 002 0 . 107 71 . 1% 57 (5 . 55) ( 1 . 31) ( 3 . 38) ( 0 . 03) (8 . 67) (0 . 55) ( 3 . 69) 363 0 . 115 0 . 064 0 . 361 0 . 016 0 . 204 0 . 123 52 . 7% (5 . 44) (0 . 69) ( 2 . 44) (1 . 28) (15 . 67) ( 8 . 45) United States 0 . 028 0 . 012 0 . 051 0 . 005 0 . 012 0 . 005 0 . 048 30 . 0% 988 (7 . 86) ( 0 . 64) (1 . 26) (1 . 48) (3 . 51) (11 . 98) ( 10 . 3) 988 0 . 043 0 . 028 0 . 032 0 . 000 0 . 024 0 . 057 19 . 9% (12 . 44) ( 1 . 38) (0 . 73) (0 . 08) (6 . 85) ( 11 . 72) Note: Regression coefficients are estimated using pooled ordinary least squares for each country sample, with and without the market-to-book ratio. Dividends divided by total assets is the dependent variable. The independent variables are as follows. Busrisk is the standard deviation of the return on investment. Size is the natural logarithm of sales in local currency. Tangibility is the tangibility of assets: total assets minus
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